Correlation Between Si Bone and Cutera

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

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

Diversification Opportunities for Si Bone and Cutera

0.38

Correlation Coefficient

Si Bone  Cutera

Weak diversification

The 3 months correlation between SIBN and Cutera is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Si Bone and Cutera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cutera Inc 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 Cutera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cutera Inc has no effect on the direction of Si Bone i.e., Si Bone and Cutera go up and down completely randomly.

Pair Corralation between Si Bone and Cutera

Given the investment horizon of 90 days Si Bone is expected to generate 0.4 times more return on investment than Cutera. However, Si Bone is 2.5 times less risky than Cutera. It trades about 0.02 of its potential returns per unit of risk. Cutera Inc is currently generating about -0.08 per unit of risk. If you would invest  1,301  in Si Bone on September 2, 2024 and sell it today you would earn a total of  55.00  from holding Si Bone or generate 4.23% return on investment over 90 days.

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

Si Bone  vs.  Cutera Inc

Si Bone

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Si Bone has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Cutera Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cutera Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Si Bone and Cutera

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

The idea behind Si Bone and Cutera Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.