Correlation Between Profound Medical and Integra LifeSciences

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

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

Diversification Opportunities for Profound Medical and Integra LifeSciences

-0.56

Correlation Coefficient

Profound Medical  Integra LifeSciences

Excellent diversification

The 3 months correlation between Profound and Integra is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and Integra LifeSciences Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra LifeSciences and Profound 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 Profound Medical Corp are associated (or correlated) with Integra LifeSciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra LifeSciences has no effect on the direction of Profound Medical i.e., Profound Medical and Integra LifeSciences go up and down completely randomly.

Pair Corralation between Profound Medical and Integra LifeSciences

Given the investment horizon of 90 days Profound Medical Corp is expected to under-perform the Integra LifeSciences. But the stock apears to be less risky and, when comparing its historical volatility, Profound Medical Corp is 1.12 times less risky than Integra LifeSciences. The stock trades about -0.08 of its potential returns per unit of risk. The Integra LifeSciences Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,247  in Integra LifeSciences Holdings on December 29, 2024 and sell it today you would lose (78.00) from holding Integra LifeSciences Holdings or give up 3.47% of portfolio value over 90 days.

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

Profound Medical Corp  vs.  Integra LifeSciences Holdings

Profound Medical Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Profound Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Integra LifeSciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integra LifeSciences Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Integra LifeSciences is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Profound Medical and Integra LifeSciences

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

The idea behind Profound Medical Corp and Integra LifeSciences Holdings 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.