Correlation Between GLOBUS MEDICAL and ResMed

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

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

Diversification Opportunities for GLOBUS MEDICAL and ResMed

0.81

Correlation Coefficient

GLOBUS MEDICAL  ResMed

Very poor diversification

The 3 months correlation between GLOBUS and ResMed is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed Inc and GLOBUS 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 GLOBUS MEDICAL A are associated (or correlated) with ResMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ResMed Inc has no effect on the direction of GLOBUS MEDICAL i.e., GLOBUS MEDICAL and ResMed go up and down completely randomly.

Pair Corralation between GLOBUS MEDICAL and ResMed

Assuming the 90 days trading horizon GLOBUS MEDICAL A is expected to generate 0.83 times more return on investment than ResMed. However, GLOBUS MEDICAL A is 1.2 times less risky than ResMed. It trades about 0.11 of its potential returns per unit of risk. ResMed Inc is currently generating about 0.09 per unit of risk. If you would invest  4,320  in GLOBUS MEDICAL A on September 24, 2024 and sell it today you would earn a total of  3,480  from holding GLOBUS MEDICAL A or generate 80.56% return on investment over 90 days.

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

GLOBUS MEDICAL A  vs.  ResMed Inc

GLOBUS MEDICAL A

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GLOBUS MEDICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

ResMed Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ResMed Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ResMed is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GLOBUS MEDICAL and ResMed

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

The idea behind GLOBUS MEDICAL A and ResMed Inc 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.