Correlation Between CONMED and LivaNova PLC

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

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

Diversification Opportunities for CONMED and LivaNova PLC

0.8

Correlation Coefficient

CONMED  LivaNova PLC

Very poor diversification

The 3 months correlation between CONMED and LivaNova is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CONMED and LivaNova PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LivaNova PLC and CONMED 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 CONMED are associated (or correlated) with LivaNova PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LivaNova PLC has no effect on the direction of CONMED i.e., CONMED and LivaNova PLC go up and down completely randomly.

Pair Corralation between CONMED and LivaNova PLC

Given the investment horizon of 90 days CONMED is expected to under-perform the LivaNova PLC. But the stock apears to be less risky and, when comparing its historical volatility, CONMED is 1.18 times less risky than LivaNova PLC. The stock trades about -0.1 of its potential returns per unit of risk. The LivaNova PLC is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  4,570  in LivaNova PLC on December 30, 2024 and sell it today you would lose (657.00) from holding LivaNova PLC or give up 14.38% of portfolio value over 90 days.

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

CONMED  vs.  LivaNova PLC

CONMED

Risk-Adjusted Performance

Very Weak

Over the last 90 days CONMED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

LivaNova PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days LivaNova PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CONMED and LivaNova PLC

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

The idea behind CONMED and LivaNova PLC 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.