Correlation Between Dentsply Sirona and CareCloud

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

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

Diversification Opportunities for Dentsply Sirona and CareCloud

-0.43

Correlation Coefficient

Dentsply Sirona  CareCloud

Very good diversification

The 3 months correlation between Dentsply and CareCloud is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona and CareCloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareCloud and Dentsply Sirona 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 Dentsply Sirona are associated (or correlated) with CareCloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareCloud has no effect on the direction of Dentsply Sirona i.e., Dentsply Sirona and CareCloud go up and down completely randomly.

Pair Corralation between Dentsply Sirona and CareCloud

Given the investment horizon of 90 days Dentsply Sirona is expected to under-perform the CareCloud. But the stock apears to be less risky and, when comparing its historical volatility, Dentsply Sirona is 1.74 times less risky than CareCloud. The stock trades about -0.08 of its potential returns per unit of risk. The CareCloud is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  275.00  in CareCloud on September 14, 2024 and sell it today you would earn a total of  120.00  from holding CareCloud or generate 43.64% return on investment over 90 days.

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

Dentsply Sirona  vs.  CareCloud

Dentsply Sirona

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dentsply Sirona 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 fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CareCloud

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CareCloud are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, CareCloud exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dentsply Sirona and CareCloud

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

The idea behind Dentsply Sirona and CareCloud 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.