Correlation Between Neuronetics and Standard Biotools

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

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

Diversification Opportunities for Neuronetics and Standard Biotools

-0.9

Correlation Coefficient

Neuronetics  Standard Biotools

Pay attention - limited upside

The 3 months correlation between Neuronetics and Standard is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Neuronetics and Standard Biotools in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Biotools and Neuronetics 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 Neuronetics are associated (or correlated) with Standard Biotools. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Biotools has no effect on the direction of Neuronetics i.e., Neuronetics and Standard Biotools go up and down completely randomly.

Pair Corralation between Neuronetics and Standard Biotools

Given the investment horizon of 90 days Neuronetics is expected to generate 1.61 times more return on investment than Standard Biotools. However, Neuronetics is 1.61 times more volatile than Standard Biotools. It trades about 0.19 of its potential returns per unit of risk. Standard Biotools is currently generating about -0.09 per unit of risk. If you would invest  161.00  in Neuronetics on December 31, 2024 and sell it today you would earn a total of  216.00  from holding Neuronetics or generate 134.16% return on investment over 90 days.

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

Neuronetics  vs.  Standard Biotools

Neuronetics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Neuronetics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Neuronetics displayed solid returns over the last few months and may actually be approaching a breakup point.

Standard Biotools

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Neuronetics and Standard Biotools

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

The idea behind Neuronetics and Standard Biotools 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.