Can any of the company-specific risk be diversified away by investing in both Nuwellis and Asensus Surgical 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 Nuwellis and Asensus Surgical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuwellis and Asensus Surgical, you can compare the effects of market volatilities on Nuwellis and Asensus Surgical 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 Nuwellis with a short position of Asensus Surgical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuwellis and Asensus Surgical.
Diversification Opportunities for Nuwellis and Asensus Surgical
The 3 months correlation between Nuwellis and Asensus is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nuwellis and Asensus Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asensus Surgical and Nuwellis 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 Nuwellis are associated (or correlated) with Asensus Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asensus Surgical has no effect on the direction of Nuwellis i.e., Nuwellis and Asensus Surgical go up and down completely randomly.
Pair Corralation between Nuwellis and Asensus Surgical
Given the investment horizon of 90 days Nuwellis is expected to generate 2.57 times more return on investment than Asensus Surgical. However, Nuwellis is 2.57 times more volatile than Asensus Surgical. It trades about -0.01 of its potential returns per unit of risk. Asensus Surgical is currently generating about -0.05 per unit of risk. If you would invest 47.00 in Nuwellis on March 6, 2024 and sell it today you would lose (23.00) from holding Nuwellis or give up 48.94% of portfolio value over 90 days.
Over the last 90 days Nuwellis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
Over the last 90 days Asensus Surgical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.