Correlation Between Orthofix Medical and Bruker

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

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

Diversification Opportunities for Orthofix Medical and Bruker

-0.23

Correlation Coefficient

Orthofix Medical  Bruker

Very good diversification

The 3 months correlation between Orthofix and Bruker is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Orthofix Medical and Bruker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bruker and Orthofix 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 Orthofix Medical are associated (or correlated) with Bruker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bruker has no effect on the direction of Orthofix Medical i.e., Orthofix Medical and Bruker go up and down completely randomly.

Pair Corralation between Orthofix Medical and Bruker

Given the investment horizon of 90 days Orthofix Medical is expected to under-perform the Bruker. But the stock apears to be less risky and, when comparing its historical volatility, Orthofix Medical is 2.12 times less risky than Bruker. The stock trades about 0.0 of its potential returns per unit of risk. The Bruker is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,821  in Bruker on November 19, 2024 and sell it today you would earn a total of  183.00  from holding Bruker or generate 3.8% return on investment over 90 days.

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

Orthofix Medical  vs.  Bruker

Orthofix Medical

Risk-Adjusted Performance

Very Weak

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

Bruker

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bruker are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking signals, Bruker may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Orthofix Medical and Bruker

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

The idea behind Orthofix Medical and Bruker 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.