Correlation Between Dennys Corp and Catheter Precision

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

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

Diversification Opportunities for Dennys Corp and Catheter Precision

0.03

Correlation Coefficient

Dennys Corp  Catheter Precision

Significant diversification

The 3 months correlation between Dennys and Catheter is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dennys Corp and Catheter Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catheter Precision and Dennys Corp 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 Dennys Corp are associated (or correlated) with Catheter Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catheter Precision has no effect on the direction of Dennys Corp i.e., Dennys Corp and Catheter Precision go up and down completely randomly.

Pair Corralation between Dennys Corp and Catheter Precision

Given the investment horizon of 90 days Dennys Corp is expected to generate 0.3 times more return on investment than Catheter Precision. However, Dennys Corp is 3.29 times less risky than Catheter Precision. It trades about -0.04 of its potential returns per unit of risk. Catheter Precision is currently generating about -0.06 per unit of risk. If you would invest  1,271  in Dennys Corp on October 26, 2024 and sell it today you would lose (635.00) from holding Dennys Corp or give up 49.96% of portfolio value over 90 days.

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

Dennys Corp  vs.  Catheter Precision

Dennys Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dennys Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dennys Corp is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Catheter Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catheter Precision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Dennys Corp and Catheter Precision

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

The idea behind Dennys Corp and Catheter Precision 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.