Correlation Between Guardant Health and Icecure Medical

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

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

Diversification Opportunities for Guardant Health and Icecure Medical

0.62

Correlation Coefficient

Guardant Health  Icecure Medical

Poor diversification

The 3 months correlation between Guardant and Icecure is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and Icecure Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icecure Medical and Guardant Health 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 Guardant Health are associated (or correlated) with Icecure Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icecure Medical has no effect on the direction of Guardant Health i.e., Guardant Health and Icecure Medical go up and down completely randomly.

Pair Corralation between Guardant Health and Icecure Medical

Allowing for the 90-day total investment horizon Guardant Health is expected to under-perform the Icecure Medical. But the stock apears to be less risky and, when comparing its historical volatility, Guardant Health is 1.63 times less risky than Icecure Medical. The stock trades about -0.18 of its potential returns per unit of risk. The Icecure Medical is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  78.00  in Icecure Medical on September 24, 2024 and sell it today you would earn a total of  34.00  from holding Icecure Medical or generate 43.59% return on investment over 90 days.

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

Guardant Health  vs.  Icecure Medical

Guardant Health

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardant Health are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Guardant Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Icecure Medical

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with Guardant Health and Icecure Medical

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

The idea behind Guardant Health and Icecure Medical 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.