Correlation Between SurModics and Bioventus

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

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

Diversification Opportunities for SurModics and Bioventus

0.39

Correlation Coefficient

SurModics  Bioventus

Weak diversification

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

Pair Corralation between SurModics and Bioventus

Given the investment horizon of 90 days SurModics is expected to under-perform the Bioventus. But the stock apears to be less risky and, when comparing its historical volatility, SurModics is 1.77 times less risky than Bioventus. The stock trades about -0.16 of its potential returns per unit of risk. The Bioventus is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,054  in Bioventus on December 30, 2024 and sell it today you would lose (151.00) from holding Bioventus or give up 14.33% of portfolio value over 90 days.

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

SurModics  vs.  Bioventus

SurModics

Risk-Adjusted Performance

Very Weak

Over the last 90 days SurModics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bioventus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bioventus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SurModics and Bioventus

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

The idea behind SurModics and Bioventus 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.