Correlation Between DermTech and TransMedics

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

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

Diversification Opportunities for DermTech and TransMedics

0.92

Correlation Coefficient

DermTech  TransMedics

Almost no diversification

The 3 months correlation between DermTech and TransMedics is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding DermTech and TransMedics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransMedics Group and DermTech 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 DermTech are associated (or correlated) with TransMedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransMedics Group has no effect on the direction of DermTech i.e., DermTech and TransMedics go up and down completely randomly.

Pair Corralation between DermTech and TransMedics

If you would invest  3.65  in DermTech on October 9, 2024 and sell it today you would earn a total of  0.00  from holding DermTech or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	1.61%
Values	Daily Returns

DermTech  vs.  TransMedics Group

DermTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DermTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, DermTech is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

TransMedics Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TransMedics Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with DermTech and TransMedics

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

The idea behind DermTech and TransMedics Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.