Correlation Between Alphatec Holdings and Anika Therapeutics

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

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

Diversification Opportunities for Alphatec Holdings and Anika Therapeutics

-0.93

Correlation Coefficient

Alphatec Holdings  Anika Therapeutics

Pay attention - limited upside

The 3 months correlation between Alphatec and Anika is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Alphatec Holdings and Anika Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anika Therapeutics and Alphatec Holdings 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 Alphatec Holdings are associated (or correlated) with Anika Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anika Therapeutics has no effect on the direction of Alphatec Holdings i.e., Alphatec Holdings and Anika Therapeutics go up and down completely randomly.

Pair Corralation between Alphatec Holdings and Anika Therapeutics

Given the investment horizon of 90 days Alphatec Holdings is expected to under-perform the Anika Therapeutics. In addition to that, Alphatec Holdings is 1.45 times more volatile than Anika Therapeutics. It trades about -0.24 of its total potential returns per unit of risk. Anika Therapeutics is currently generating about -0.26 per unit of volatility. If you would invest  1,772  in Anika Therapeutics on September 28, 2024 and sell it today you would lose (162.00) from holding Anika Therapeutics or give up 9.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Alphatec Holdings  vs.  Anika Therapeutics

Alphatec Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphatec Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Alphatec Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Alphatec Holdings and Anika Therapeutics

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

The idea behind Alphatec Holdings and Anika Therapeutics 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.