Correlation Between Dynatronics and STRATA Skin

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

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

Diversification Opportunities for Dynatronics and STRATA Skin

0.55

Correlation Coefficient

Dynatronics  STRATA Skin

Very weak diversification

The 3 months correlation between Dynatronics and STRATA is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dynatronics and STRATA Skin Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRATA Skin Sciences and Dynatronics 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 Dynatronics are associated (or correlated) with STRATA Skin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRATA Skin Sciences has no effect on the direction of Dynatronics i.e., Dynatronics and STRATA Skin go up and down completely randomly.

Pair Corralation between Dynatronics and STRATA Skin

Given the investment horizon of 90 days Dynatronics is expected to generate 1.33 times more return on investment than STRATA Skin. However, Dynatronics is 1.33 times more volatile than STRATA Skin Sciences. It trades about 0.0 of its potential returns per unit of risk. STRATA Skin Sciences is currently generating about -0.1 per unit of risk. If you would invest  43.00  in Dynatronics on March 16, 2024 and sell it today you would lose (6.35) from holding Dynatronics or give up 14.77% of portfolio value over 90 days.

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

Dynatronics  vs.  STRATA Skin Sciences

Dynatronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynatronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dynatronics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

STRATA Skin Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRATA Skin Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Dynatronics and STRATA Skin

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

The idea behind Dynatronics and STRATA Skin Sciences 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.