Correlation Between Si Bone and Anika Therapeutics

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

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

Diversification Opportunities for Si Bone and Anika Therapeutics

0.71

Correlation Coefficient

Si Bone  Anika Therapeutics

Poor diversification

The 3 months correlation between SIBN and Anika is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Si Bone and Anika Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anika Therapeutics and Si Bone 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 Si Bone are associated (or correlated) with Anika Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anika Therapeutics has no effect on the direction of Si Bone i.e., Si Bone and Anika Therapeutics go up and down completely randomly.

Pair Corralation between Si Bone and Anika Therapeutics

Given the investment horizon of 90 days Si Bone is expected to generate 1.75 times more return on investment than Anika Therapeutics. However, Si Bone is 1.75 times more volatile than Anika Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Anika Therapeutics is currently generating about -0.03 per unit of risk. If you would invest  1,371  in Si Bone on December 28, 2024 and sell it today you would earn a total of  33.00  from holding Si Bone or generate 2.41% return on investment over 90 days.

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

Si Bone  vs.  Anika Therapeutics

Si Bone

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Si Bone are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, Si Bone may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Anika Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anika Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Anika Therapeutics is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Si Bone and Anika Therapeutics

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

The idea behind Si Bone and Anika Therapeutics 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.