Correlation Between Haemonetics and ResMed

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

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

Diversification Opportunities for Haemonetics and ResMed

0.02

Correlation Coefficient

Haemonetics  ResMed

Significant diversification

The 3 months correlation between Haemonetics and ResMed is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Haemonetics and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed Inc and Haemonetics 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 Haemonetics 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 Haemonetics i.e., Haemonetics and ResMed go up and down completely randomly.

Pair Corralation between Haemonetics and ResMed

Considering the 90-day investment horizon Haemonetics is expected to generate 1.3 times more return on investment than ResMed. However, Haemonetics is 1.3 times more volatile than ResMed Inc. It trades about 0.12 of its potential returns per unit of risk. ResMed Inc is currently generating about 0.03 per unit of risk. If you would invest  7,507  in Haemonetics on September 2, 2024 and sell it today you would earn a total of  1,240  from holding Haemonetics or generate 16.52% return on investment over 90 days.

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

Haemonetics  vs.  ResMed Inc

Haemonetics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Haemonetics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Haemonetics exhibited solid returns over the last few months and may actually be approaching a breakup point.

ResMed Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ResMed Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, ResMed is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Haemonetics and ResMed

The main advantage of trading using opposite Haemonetics and ResMed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haemonetics 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 Haemonetics 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.