Correlation Between Concord Medical and Smith Nephew

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

By analyzing existing cross correlation between Concord Medical Services and Smith Nephew SNATS, you can compare the effects of market volatilities on Concord Medical and Smith Nephew 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 Concord Medical with a short position of Smith Nephew. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concord Medical and Smith Nephew.

Diversification Opportunities for Concord Medical and Smith Nephew

-0.61

Correlation Coefficient

Concord Medical  Smith Nephew

Excellent diversification

The 3 months correlation between Concord and Smith is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Concord Medical Services and Smith Nephew SNATS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Nephew SNATS and Concord Medical 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 Concord Medical Services are associated (or correlated) with Smith Nephew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Nephew SNATS has no effect on the direction of Concord Medical i.e., Concord Medical and Smith Nephew go up and down completely randomly.

Pair Corralation between Concord Medical and Smith Nephew

Considering the 90-day investment horizon Concord Medical Services is expected to under-perform the Smith Nephew. In addition to that, Concord Medical is 2.23 times more volatile than Smith Nephew SNATS. It trades about -0.14 of its total potential returns per unit of risk. Smith Nephew SNATS is currently generating about 0.18 per unit of volatility. If you would invest  2,888  in Smith Nephew SNATS on May 16, 2025 and sell it today you would earn a total of  790.00  from holding Smith Nephew SNATS or generate 27.35% return on investment over 90 days.

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

Concord Medical Services  vs.  Smith Nephew SNATS

Concord Medical Services

Risk-Adjusted Performance

Weakest

Over the last 90 days Concord Medical Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Smith Nephew SNATS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smith Nephew SNATS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Smith Nephew displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Concord Medical and Smith Nephew

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

The idea behind Concord Medical Services and Smith Nephew SNATS 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.