Correlation Between Concentra Group and Solventum Corp

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

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

Diversification Opportunities for Concentra Group and Solventum Corp

0.67

Correlation Coefficient

Concentra Group  Solventum Corp

Poor diversification

The 3 months correlation between Concentra and Solventum is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Concentra Group Holdings and Solventum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solventum Corp and Concentra Group 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 Concentra Group Holdings are associated (or correlated) with Solventum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solventum Corp has no effect on the direction of Concentra Group i.e., Concentra Group and Solventum Corp go up and down completely randomly.

Pair Corralation between Concentra Group and Solventum Corp

Considering the 90-day investment horizon Concentra Group is expected to generate 1.74 times less return on investment than Solventum Corp. But when comparing it to its historical volatility, Concentra Group Holdings is 1.05 times less risky than Solventum Corp. It trades about 0.07 of its potential returns per unit of risk. Solventum Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,605  in Solventum Corp on December 30, 2024 and sell it today you would earn a total of  870.00  from holding Solventum Corp or generate 13.17% return on investment over 90 days.

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

Concentra Group Holdings  vs.  Solventum Corp

Concentra Group Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Concentra Group Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Concentra Group may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Solventum Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solventum Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Solventum Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Concentra Group and Solventum Corp

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

The idea behind Concentra Group Holdings and Solventum Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.