Correlation Between Integer Holdings and Establishment Labs

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

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

Diversification Opportunities for Integer Holdings and Establishment Labs

0.89

Correlation Coefficient

Integer Holdings  Establishment Labs

Very poor diversification

The 3 months correlation between Integer and Establishment is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Integer Holdings Corp and Establishment Labs Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Establishment Labs and Integer Holdings 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 Integer Holdings Corp are associated (or correlated) with Establishment Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Establishment Labs has no effect on the direction of Integer Holdings i.e., Integer Holdings and Establishment Labs go up and down completely randomly.

Pair Corralation between Integer Holdings and Establishment Labs

Given the investment horizon of 90 days Integer Holdings Corp is expected to generate 0.58 times more return on investment than Establishment Labs. However, Integer Holdings Corp is 1.72 times less risky than Establishment Labs. It trades about 0.05 of its potential returns per unit of risk. Establishment Labs Holdings is currently generating about 0.01 per unit of risk. If you would invest  7,542  in Integer Holdings Corp on February 6, 2024 and sell it today you would earn a total of  3,585  from holding Integer Holdings Corp or generate 47.53% return on investment over 90 days.

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

Integer Holdings Corp  vs.  Establishment Labs Holdings

Integer Holdings Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Integer Holdings Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Integer Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Establishment Labs

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Establishment Labs Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Establishment Labs sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Integer Holdings and Establishment Labs

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

The idea behind Integer Holdings Corp and Establishment Labs Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.