Correlation Between Smith Nephew and Nemaura Medical

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

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

Diversification Opportunities for Smith Nephew and Nemaura Medical

0.0

Correlation Coefficient

Smith Nephew  Nemaura Medical

Pay attention - limited upside

The 3 months correlation between Smith and Nemaura is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Smith Nephew SNATS and Nemaura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nemaura Medical and Smith Nephew 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 Smith Nephew SNATS are associated (or correlated) with Nemaura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nemaura Medical has no effect on the direction of Smith Nephew i.e., Smith Nephew and Nemaura Medical go up and down completely randomly.

Pair Corralation between Smith Nephew and Nemaura Medical

If you would invest  2,708  in Smith Nephew SNATS on November 20, 2024 and sell it today you would lose (138.00) from holding Smith Nephew SNATS or give up 5.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Smith Nephew SNATS  vs.  Nemaura Medical

Smith Nephew SNATS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Smith Nephew SNATS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Smith Nephew is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Nemaura Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nemaura Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Nemaura Medical is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Smith Nephew and Nemaura Medical

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

The idea behind Smith Nephew SNATS and Nemaura Medical 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.