Correlation Between ATT and SANUWAVE Health
Can any of the company-specific risk be diversified away by investing in both ATT and SANUWAVE Health 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 ATT and SANUWAVE Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and SANUWAVE Health, you can compare the effects of market volatilities on ATT and SANUWAVE Health 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 ATT with a short position of SANUWAVE Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and SANUWAVE Health.
Diversification Opportunities for ATT and SANUWAVE Health
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between ATT and SANUWAVE is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and SANUWAVE Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANUWAVE Health and ATT 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 ATT Inc are associated (or correlated) with SANUWAVE Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANUWAVE Health has no effect on the direction of ATT i.e., ATT and SANUWAVE Health go up and down completely randomly.
Pair Corralation between ATT and SANUWAVE Health
Taking into account the 90-day investment horizon ATT is expected to generate 194.45 times less return on investment than SANUWAVE Health. But when comparing it to its historical volatility, ATT Inc is 4.53 times less risky than SANUWAVE Health. It trades about 0.01 of its potential returns per unit of risk. SANUWAVE Health is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,200 in SANUWAVE Health on October 20, 2024 and sell it today you would earn a total of 450.00 from holding SANUWAVE Health or generate 20.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
ATT Inc vs. SANUWAVE Health
Performance |
Timeline |
ATT Inc |
SANUWAVE Health |
ATT and SANUWAVE Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ATT and SANUWAVE Health
The main advantage of trading using opposite ATT and SANUWAVE Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, SANUWAVE Health 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 SANUWAVE Health will offset losses from the drop in SANUWAVE Health's long position.The idea behind ATT Inc and SANUWAVE Health 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.SANUWAVE Health vs. Rafarma Pharmaceuticals | SANUWAVE Health vs. GulfSlope Energy | SANUWAVE Health vs. TSS, Common Stock |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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