Correlation Between Penumbra and Bioventus

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

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

Diversification Opportunities for Penumbra and Bioventus

-0.48

Correlation Coefficient

Penumbra  Bioventus

Very good diversification

The 3 months correlation between Penumbra and Bioventus is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Penumbra and Bioventus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioventus and Penumbra 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 Penumbra are associated (or correlated) with Bioventus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioventus has no effect on the direction of Penumbra i.e., Penumbra and Bioventus go up and down completely randomly.

Pair Corralation between Penumbra and Bioventus

Considering the 90-day investment horizon Penumbra is expected to generate 0.86 times more return on investment than Bioventus. However, Penumbra is 1.16 times less risky than Bioventus. It trades about 0.11 of its potential returns per unit of risk. Bioventus is currently generating about -0.1 per unit of risk. If you would invest  24,484  in Penumbra on December 1, 2024 and sell it today you would earn a total of  4,060  from holding Penumbra or generate 16.58% return on investment over 90 days.

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

Penumbra  vs.  Bioventus

Penumbra

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penumbra are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Penumbra displayed solid returns over the last few months and may actually be approaching a breakup point.

Bioventus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bioventus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Penumbra and Bioventus

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

The idea behind Penumbra and Bioventus 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.