Correlation Between Anika Therapeutics and Delcath Systems

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

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

Diversification Opportunities for Anika Therapeutics and Delcath Systems

-0.6

Correlation Coefficient

Anika Therapeutics  Delcath Systems

Excellent diversification

The 3 months correlation between Anika and Delcath is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Anika Therapeutics and Delcath Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delcath Systems 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 Delcath Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delcath Systems has no effect on the direction of Anika Therapeutics i.e., Anika Therapeutics and Delcath Systems go up and down completely randomly.

Pair Corralation between Anika Therapeutics and Delcath Systems

Given the investment horizon of 90 days Anika Therapeutics is expected to under-perform the Delcath Systems. But the stock apears to be less risky and, when comparing its historical volatility, Anika Therapeutics is 2.36 times less risky than Delcath Systems. The stock trades about -0.26 of its potential returns per unit of risk. The Delcath Systems is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,122  in Delcath Systems on September 28, 2024 and sell it today you would earn a total of  75.00  from holding Delcath Systems or generate 6.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Anika Therapeutics  vs.  Delcath Systems

Anika Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anika Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Delcath Systems

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delcath Systems are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Delcath Systems demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anika Therapeutics and Delcath Systems

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

The idea behind Anika Therapeutics and Delcath Systems 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.