Correlation Between CVRx and Anika Therapeutics

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

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

Diversification Opportunities for CVRx and Anika Therapeutics

0.19

Correlation Coefficient

CVRx  Anika Therapeutics

Average diversification

The 3 months correlation between CVRx and Anika is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CVRx Inc and Anika Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anika Therapeutics and CVRx 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 CVRx Inc 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 CVRx i.e., CVRx and Anika Therapeutics go up and down completely randomly.

Pair Corralation between CVRx and Anika Therapeutics

Given the investment horizon of 90 days CVRx Inc is expected to generate 1.73 times more return on investment than Anika Therapeutics. However, CVRx is 1.73 times more volatile than Anika Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Anika Therapeutics is currently generating about -0.04 per unit of risk. If you would invest  1,317  in CVRx Inc on December 27, 2024 and sell it today you would lose (57.00) from holding CVRx Inc or give up 4.33% of portfolio value over 90 days.

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

CVRx Inc  vs.  Anika Therapeutics

CVRx Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVRx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CVRx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Anika Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anika Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Anika Therapeutics is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CVRx and Anika Therapeutics

The main advantage of trading using opposite CVRx and Anika Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVRx 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 CVRx Inc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.