Correlation Between Utah Medical and Sanara Medtech

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

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

Diversification Opportunities for Utah Medical and Sanara Medtech

0.36

Correlation Coefficient

Utah Medical  Sanara Medtech

Weak diversification

The 3 months correlation between Utah and Sanara is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Utah Medical Products and Sanara Medtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanara Medtech and Utah Medical 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 Utah Medical Products are associated (or correlated) with Sanara Medtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanara Medtech has no effect on the direction of Utah Medical i.e., Utah Medical and Sanara Medtech go up and down completely randomly.

Pair Corralation between Utah Medical and Sanara Medtech

Given the investment horizon of 90 days Utah Medical Products is expected to under-perform the Sanara Medtech. But the stock apears to be less risky and, when comparing its historical volatility, Utah Medical Products is 2.99 times less risky than Sanara Medtech. The stock trades about -0.13 of its potential returns per unit of risk. The Sanara Medtech is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,420  in Sanara Medtech on December 25, 2024 and sell it today you would lose (60.00) from holding Sanara Medtech or give up 1.75% of portfolio value over 90 days.

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

Utah Medical Products  vs.  Sanara Medtech

Utah Medical Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Utah Medical Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Sanara Medtech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanara Medtech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Sanara Medtech is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Utah Medical and Sanara Medtech

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

The idea behind Utah Medical Products and Sanara Medtech 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.