Correlation Between Neuronetics and Sera Prognostics

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

By analyzing existing cross correlation between Neuronetics and Sera Prognostics, you can compare the effects of market volatilities on Neuronetics and Sera Prognostics 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 Sera Prognostics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neuronetics and Sera Prognostics.

Diversification Opportunities for Neuronetics and Sera Prognostics

-0.78

Correlation Coefficient

Neuronetics  Sera Prognostics

Pay attention - limited upside

The 3 months correlation between Neuronetics and Sera is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Neuronetics and Sera Prognostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sera Prognostics 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 Sera Prognostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sera Prognostics has no effect on the direction of Neuronetics i.e., Neuronetics and Sera Prognostics go up and down completely randomly.

Pair Corralation between Neuronetics and Sera Prognostics

Given the investment horizon of 90 days Neuronetics is expected to generate 1.56 times more return on investment than Sera Prognostics. However, Neuronetics is 1.56 times more volatile than Sera Prognostics. It trades about 0.41 of its potential returns per unit of risk. Sera Prognostics is currently generating about -0.42 per unit of risk. If you would invest  224.00  in Neuronetics on November 19, 2024 and sell it today you would earn a total of  212.00  from holding Neuronetics or generate 94.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Neuronetics  vs.  Sera Prognostics

Neuronetics

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Neuronetics are ranked lower than 30 (%) 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.

Sera Prognostics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Neuronetics and Sera Prognostics

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

The idea behind Neuronetics and Sera Prognostics 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.