Correlation Between SBC Medical and Barnes

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

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

Diversification Opportunities for SBC Medical and Barnes

0.54

Correlation Coefficient

SBC Medical  Barnes

Very weak diversification

The 3 months correlation between SBC and Barnes is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SBC Medical Group and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group and SBC 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 SBC Medical Group are associated (or correlated) with Barnes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Group has no effect on the direction of SBC Medical i.e., SBC Medical and Barnes go up and down completely randomly.

Pair Corralation between SBC Medical and Barnes

Assuming the 90 days horizon SBC Medical Group is expected to under-perform the Barnes. In addition to that, SBC Medical is 63.77 times more volatile than Barnes Group. It trades about -0.05 of its total potential returns per unit of risk. Barnes Group is currently generating about 0.39 per unit of volatility. If you would invest  4,676  in Barnes Group on September 20, 2024 and sell it today you would earn a total of  41.00  from holding Barnes Group or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

SBC Medical Group  vs.  Barnes Group

SBC Medical Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBC Medical Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SBC Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Barnes Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barnes Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Barnes sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SBC Medical and Barnes

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

The idea behind SBC Medical Group and Barnes Group 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 Anywhere module to track or share privately all of your investments from the convenience of any device.