Correlation Between Alimera Sciences and Organogenesis Holdings

Can any of the company-specific risk be diversified away by investing in both Alimera Sciences and Organogenesis Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alimera Sciences and Organogenesis Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alimera Sciences and Organogenesis Holdings, you can compare the effects of market volatilities on Alimera Sciences and Organogenesis Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alimera Sciences with a short position of Organogenesis Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alimera Sciences and Organogenesis Holdings.

Diversification Opportunities for Alimera Sciences and Organogenesis Holdings

0.34

Correlation Coefficient

Alimera Sciences  Organogenesis Holdings

Weak diversification

The 3 months correlation between Alimera and Organogenesis is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Alimera Sciences and Organogenesis Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organogenesis Holdings and Alimera Sciences is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alimera Sciences are associated (or correlated) with Organogenesis Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organogenesis Holdings has no effect on the direction of Alimera Sciences i.e., Alimera Sciences and Organogenesis Holdings go up and down completely randomly.

Pair Corralation between Alimera Sciences and Organogenesis Holdings

Given the investment horizon of 90 days Alimera Sciences is expected to generate 14.12 times less return on investment than Organogenesis Holdings. But when comparing it to its historical volatility, Alimera Sciences is 1.51 times less risky than Organogenesis Holdings. It trades about 0.01 of its potential returns per unit of risk. Organogenesis Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  270.00  in Organogenesis Holdings on September 4, 2024 and sell it today you would earn a total of  116.00  from holding Organogenesis Holdings or generate 42.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	14.06%
Values	Daily Returns

Alimera Sciences  vs.  Organogenesis Holdings

Alimera Sciences

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Alimera Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Alimera Sciences is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Organogenesis Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Organogenesis Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Organogenesis Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alimera Sciences and Organogenesis Holdings

The main advantage of trading using opposite Alimera Sciences and Organogenesis Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alimera Sciences position performs unexpectedly, Organogenesis Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Organogenesis Holdings will offset losses from the drop in Organogenesis Holdings' long position.

The idea behind Alimera Sciences and Organogenesis Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.