Correlation Between STRATA Skin and Forza Innovations

Can any of the company-specific risk be diversified away by investing in both STRATA Skin and Forza Innovations 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 Forza Innovations 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 Forza Innovations, you can compare the effects of market volatilities on STRATA Skin and Forza Innovations 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 Forza Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRATA Skin and Forza Innovations.

Diversification Opportunities for STRATA Skin and Forza Innovations

0.0

Correlation Coefficient

STRATA Skin  Forza Innovations

Pay attention - limited upside

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

Pair Corralation between STRATA Skin and Forza Innovations

Given the investment horizon of 90 days STRATA Skin Sciences is expected to under-perform the Forza Innovations. But the stock apears to be less risky and, when comparing its historical volatility, STRATA Skin Sciences is 10.95 times less risky than Forza Innovations. The stock trades about -0.01 of its potential returns per unit of risk. The Forza Innovations is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Forza Innovations on October 10, 2024 and sell it today you would lose (0.02) from holding Forza Innovations or give up 66.67% of portfolio value over 90 days.

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

STRATA Skin Sciences  vs.  Forza Innovations

STRATA Skin Sciences

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STRATA Skin Sciences are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking signals, STRATA Skin may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Forza Innovations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forza Innovations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Forza Innovations is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with STRATA Skin and Forza Innovations

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

The idea behind STRATA Skin Sciences and Forza Innovations 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.