Correlation Between Cutera and Si Bone

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

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

Diversification Opportunities for Cutera and Si Bone

0.8

Correlation Coefficient

Cutera  Si Bone

Very poor diversification

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

Pair Corralation between Cutera and Si Bone

Given the investment horizon of 90 days Cutera Inc is expected to under-perform the Si Bone. In addition to that, Cutera is 3.75 times more volatile than Si Bone. It trades about -0.09 of its total potential returns per unit of risk. Si Bone is currently generating about 0.03 per unit of volatility. If you would invest  1,372  in Si Bone on December 27, 2024 and sell it today you would earn a total of  27.00  from holding Si Bone or generate 1.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	83.61%
Values	Daily Returns

Cutera Inc  vs.  Si Bone

Cutera Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cutera Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Si Bone

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Si Bone are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Si Bone is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cutera and Si Bone

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

The idea behind Cutera Inc and Si Bone 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.