Correlation Between SAFETY MEDICAL and XTANT MEDICAL

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

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

Diversification Opportunities for SAFETY MEDICAL and XTANT MEDICAL

0.39

Correlation Coefficient

SAFETY MEDICAL  XTANT MEDICAL

Weak diversification

The 3 months correlation between SAFETY and XTANT is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SAFETY MEDICAL PROD and XTANT MEDICAL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTANT MEDICAL HLDGS and SAFETY 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 SAFETY MEDICAL PROD are associated (or correlated) with XTANT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTANT MEDICAL HLDGS has no effect on the direction of SAFETY MEDICAL i.e., SAFETY MEDICAL and XTANT MEDICAL go up and down completely randomly.

Pair Corralation between SAFETY MEDICAL and XTANT MEDICAL

Assuming the 90 days trading horizon SAFETY MEDICAL PROD is expected to under-perform the XTANT MEDICAL. But the stock apears to be less risky and, when comparing its historical volatility, SAFETY MEDICAL PROD is 1.57 times less risky than XTANT MEDICAL. The stock trades about -0.04 of its potential returns per unit of risk. The XTANT MEDICAL HLDGS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  54.00  in XTANT MEDICAL HLDGS on October 13, 2024 and sell it today you would lose (11.00) from holding XTANT MEDICAL HLDGS or give up 20.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.21%
Values	Daily Returns

SAFETY MEDICAL PROD  vs.  XTANT MEDICAL HLDGS

SAFETY MEDICAL PROD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAFETY MEDICAL PROD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

XTANT MEDICAL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XTANT MEDICAL HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SAFETY MEDICAL and XTANT MEDICAL

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

The idea behind SAFETY MEDICAL PROD and XTANT MEDICAL HLDGS 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.