Correlation Between ImmuCell and SANUWAVE Health

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

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

Diversification Opportunities for ImmuCell and SANUWAVE Health

0.49

Correlation Coefficient

ImmuCell  SANUWAVE Health

Very weak diversification

The 3 months correlation between ImmuCell and SANUWAVE is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding ImmuCell and SANUWAVE Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANUWAVE Health and ImmuCell 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 ImmuCell are associated (or correlated) with SANUWAVE Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANUWAVE Health has no effect on the direction of ImmuCell i.e., ImmuCell and SANUWAVE Health go up and down completely randomly.

Pair Corralation between ImmuCell and SANUWAVE Health

Given the investment horizon of 90 days ImmuCell is expected to generate 2.17 times less return on investment than SANUWAVE Health. But when comparing it to its historical volatility, ImmuCell is 1.57 times less risky than SANUWAVE Health. It trades about 0.15 of its potential returns per unit of risk. SANUWAVE Health is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,125  in SANUWAVE Health on October 7, 2024 and sell it today you would earn a total of  1,076  from holding SANUWAVE Health or generate 95.64% return on investment over 90 days.

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

ImmuCell  vs.  SANUWAVE Health

ImmuCell

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ImmuCell are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, ImmuCell exhibited solid returns over the last few months and may actually be approaching a breakup point.

SANUWAVE Health

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SANUWAVE Health are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SANUWAVE Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ImmuCell and SANUWAVE Health

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

The idea behind ImmuCell and SANUWAVE Health 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.