Correlation Between Sharps Technology and Carl Zeiss

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

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

Diversification Opportunities for Sharps Technology and Carl Zeiss

-0.27

Correlation Coefficient

Sharps Technology  Carl Zeiss

Very good diversification

The 3 months correlation between Sharps and Carl is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sharps Technology and Carl Zeiss Meditec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carl Zeiss Meditec and Sharps Technology 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 Sharps Technology are associated (or correlated) with Carl Zeiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carl Zeiss Meditec has no effect on the direction of Sharps Technology i.e., Sharps Technology and Carl Zeiss go up and down completely randomly.

Pair Corralation between Sharps Technology and Carl Zeiss

Given the investment horizon of 90 days Sharps Technology is expected to under-perform the Carl Zeiss. In addition to that, Sharps Technology is 3.86 times more volatile than Carl Zeiss Meditec. It trades about -0.04 of its total potential returns per unit of risk. Carl Zeiss Meditec is currently generating about -0.05 per unit of volatility. If you would invest  14,343  in Carl Zeiss Meditec on December 2, 2024 and sell it today you would lose (8,125) from holding Carl Zeiss Meditec or give up 56.65% of portfolio value over 90 days.

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

Sharps Technology  vs.  Carl Zeiss Meditec

Sharps Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sharps Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic 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.

Carl Zeiss Meditec

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carl Zeiss Meditec are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Carl Zeiss may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sharps Technology and Carl Zeiss

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

The idea behind Sharps Technology and Carl Zeiss Meditec 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.