Correlation Between Cutera and Aurora Spine

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

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

Diversification Opportunities for Cutera and Aurora Spine

-0.46

Correlation Coefficient

Cutera  Aurora Spine

Very good diversification

The 3 months correlation between Cutera and Aurora is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cutera Inc and Aurora Spine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Spine and Cutera 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 Cutera Inc are associated (or correlated) with Aurora Spine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Spine has no effect on the direction of Cutera i.e., Cutera and Aurora Spine go up and down completely randomly.

Pair Corralation between Cutera and Aurora Spine

Given the investment horizon of 90 days Cutera Inc is expected to under-perform the Aurora Spine. In addition to that, Cutera is 1.41 times more volatile than Aurora Spine. It trades about -0.09 of its total potential returns per unit of risk. Aurora Spine is currently generating about -0.08 per unit of volatility. If you would invest  20.00  in Aurora Spine on March 2, 2024 and sell it today you would lose (2.00) from holding Aurora Spine or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Cutera Inc  vs.  Aurora Spine

Cutera Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cutera Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Cutera reported solid returns over the last few months and may actually be approaching a breakup point.

Aurora Spine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Spine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Cutera and Aurora Spine

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

The idea behind Cutera Inc and Aurora Spine 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.