Correlation Between Neuroone Medical and SANUWAVE Health

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

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

Diversification Opportunities for Neuroone Medical and SANUWAVE Health

-0.51

Correlation Coefficient

Neuroone Medical  SANUWAVE Health

Excellent diversification

The 3 months correlation between Neuroone and SANUWAVE is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Neuroone Medical Technologies and SANUWAVE Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANUWAVE Health and Neuroone Medical 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 Neuroone Medical Technologies 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 Neuroone Medical i.e., Neuroone Medical and SANUWAVE Health go up and down completely randomly.

Pair Corralation between Neuroone Medical and SANUWAVE Health

Given the investment horizon of 90 days Neuroone Medical Technologies is expected to generate 1.17 times more return on investment than SANUWAVE Health. However, Neuroone Medical is 1.17 times more volatile than SANUWAVE Health. It trades about 0.27 of its potential returns per unit of risk. SANUWAVE Health is currently generating about 0.27 per unit of risk. If you would invest  80.00  in Neuroone Medical Technologies on October 11, 2024 and sell it today you would earn a total of  28.00  from holding Neuroone Medical Technologies or generate 35.0% return on investment over 90 days.

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

Neuroone Medical Technologies  vs.  SANUWAVE Health

Neuroone Medical Tec

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neuroone Medical Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Neuroone Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

SANUWAVE Health

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SANUWAVE Health are ranked lower than 17 (%) 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 Neuroone Medical and SANUWAVE Health

The main advantage of trading using opposite Neuroone Medical and SANUWAVE Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neuroone Medical 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 Neuroone Medical Technologies 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.