Correlation Between Anika Therapeutics and Axogen

Can any of the company-specific risk be diversified away by investing in both Anika Therapeutics and Axogen 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 Anika Therapeutics and Axogen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Anika Therapeutics and Axogen Inc, you can compare the effects of market volatilities on Anika Therapeutics and Axogen 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 Anika Therapeutics with a short position of Axogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anika Therapeutics and Axogen.

Diversification Opportunities for Anika Therapeutics and Axogen

0.29

Correlation Coefficient

Anika Therapeutics  Axogen

Modest diversification

The 3 months correlation between Anika and Axogen is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Anika Therapeutics and Axogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axogen Inc and Anika Therapeutics 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 Anika Therapeutics are associated (or correlated) with Axogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axogen Inc has no effect on the direction of Anika Therapeutics i.e., Anika Therapeutics and Axogen go up and down completely randomly.

Pair Corralation between Anika Therapeutics and Axogen

Given the investment horizon of 90 days Anika Therapeutics is expected to under-perform the Axogen. But the stock apears to be less risky and, when comparing its historical volatility, Anika Therapeutics is 1.79 times less risky than Axogen. The stock trades about -0.05 of its potential returns per unit of risk. The Axogen Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,649  in Axogen Inc on December 28, 2024 and sell it today you would earn a total of  187.00  from holding Axogen Inc or generate 11.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Anika Therapeutics  vs.  Axogen Inc

Anika Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anika Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Anika Therapeutics is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Axogen Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Axogen Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Axogen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anika Therapeutics and Axogen

The main advantage of trading using opposite Anika Therapeutics and Axogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anika Therapeutics position performs unexpectedly, Axogen 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 Axogen will offset losses from the drop in Axogen's long position.

The idea behind Anika Therapeutics and Axogen Inc 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.