Correlation Between Bioventus and Retractable Technologies

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

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

Diversification Opportunities for Bioventus and Retractable Technologies

-0.48

Correlation Coefficient

Bioventus  Retractable Technologies

Very good diversification

The 3 months correlation between Bioventus and Retractable is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bioventus and Retractable Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retractable Technologies and Bioventus 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 Bioventus are associated (or correlated) with Retractable Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retractable Technologies has no effect on the direction of Bioventus i.e., Bioventus and Retractable Technologies go up and down completely randomly.

Pair Corralation between Bioventus and Retractable Technologies

Considering the 90-day investment horizon Bioventus is expected to generate 1.68 times more return on investment than Retractable Technologies. However, Bioventus is 1.68 times more volatile than Retractable Technologies. It trades about 0.1 of its potential returns per unit of risk. Retractable Technologies is currently generating about -0.04 per unit of risk. If you would invest  300.00  in Bioventus on September 4, 2024 and sell it today you would earn a total of  928.00  from holding Bioventus or generate 309.33% return on investment over 90 days.

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

Bioventus  vs.  Retractable Technologies

Bioventus

Risk-Adjusted Performance

9 of 100

OK

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

Retractable Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retractable Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Bioventus and Retractable Technologies

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

The idea behind Bioventus and Retractable Technologies 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.