Correlation Between STRATA Skin and InfuSystems Holdings

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

Diversification Opportunities for STRATA Skin and InfuSystems Holdings

0.6

Correlation Coefficient

STRATA Skin  InfuSystems Holdings

Poor diversification

The 3 months correlation between STRATA and InfuSystems is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding STRATA Skin Sciences and InfuSystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfuSystems Holdings 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 InfuSystems Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfuSystems Holdings has no effect on the direction of STRATA Skin i.e., STRATA Skin and InfuSystems Holdings go up and down completely randomly.

Pair Corralation between STRATA Skin and InfuSystems Holdings

Given the investment horizon of 90 days STRATA Skin Sciences is expected to generate 0.95 times more return on investment than InfuSystems Holdings. However, STRATA Skin Sciences is 1.05 times less risky than InfuSystems Holdings. It trades about -0.03 of its potential returns per unit of risk. InfuSystems Holdings is currently generating about -0.15 per unit of risk. If you would invest  295.00  in STRATA Skin Sciences on December 30, 2024 and sell it today you would lose (26.00) from holding STRATA Skin Sciences or give up 8.81% of portfolio value over 90 days.

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

STRATA Skin Sciences  vs.  InfuSystems Holdings

STRATA Skin Sciences

Risk-Adjusted Performance

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 very healthy forward-looking signals, STRATA Skin is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

InfuSystems Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days InfuSystems Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with STRATA Skin and InfuSystems Holdings

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

The idea behind STRATA Skin Sciences and InfuSystems Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.