Correlation Between STRATA Skin and Accelerate Diagnostics

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

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

Diversification Opportunities for STRATA Skin and Accelerate Diagnostics

-0.03

Correlation Coefficient

STRATA Skin  Accelerate Diagnostics

Good diversification

The 3 months correlation between STRATA and Accelerate is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding STRATA Skin Sciences and Accelerate Diagnostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accelerate Diagnostics and STRATA Skin 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 STRATA Skin Sciences are associated (or correlated) with Accelerate Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accelerate Diagnostics has no effect on the direction of STRATA Skin i.e., STRATA Skin and Accelerate Diagnostics go up and down completely randomly.

Pair Corralation between STRATA Skin and Accelerate Diagnostics

Given the investment horizon of 90 days STRATA Skin Sciences is expected to generate 0.5 times more return on investment than Accelerate Diagnostics. However, STRATA Skin Sciences is 1.98 times less risky than Accelerate Diagnostics. It trades about -0.04 of its potential returns per unit of risk. Accelerate Diagnostics is currently generating about -0.42 per unit of risk. If you would invest  294.00  in STRATA Skin Sciences on September 26, 2024 and sell it today you would lose (6.00) from holding STRATA Skin Sciences or give up 2.04% of portfolio value over 90 days.

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

STRATA Skin Sciences  vs.  Accelerate Diagnostics

STRATA Skin Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRATA Skin Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Accelerate Diagnostics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accelerate Diagnostics 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with STRATA Skin and Accelerate Diagnostics

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

The idea behind STRATA Skin Sciences and Accelerate Diagnostics 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.