Correlation Between ICU Medical and Alcon AG

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

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

Diversification Opportunities for ICU Medical and Alcon AG

-0.21

Correlation Coefficient

ICU Medical  Alcon AG

Very good diversification

The 3 months correlation between ICU and Alcon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and Alcon AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcon AG and ICU 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 ICU Medical are associated (or correlated) with Alcon AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcon AG has no effect on the direction of ICU Medical i.e., ICU Medical and Alcon AG go up and down completely randomly.

Pair Corralation between ICU Medical and Alcon AG

Given the investment horizon of 90 days ICU Medical is expected to under-perform the Alcon AG. In addition to that, ICU Medical is 1.56 times more volatile than Alcon AG. It trades about -0.01 of its total potential returns per unit of risk. Alcon AG is currently generating about 0.08 per unit of volatility. If you would invest  8,565  in Alcon AG on December 27, 2024 and sell it today you would earn a total of  567.00  from holding Alcon AG or generate 6.62% return on investment over 90 days.

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

ICU Medical  vs.  Alcon AG

ICU Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICU Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, ICU Medical is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Alcon AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alcon AG are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Alcon AG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ICU Medical and Alcon AG

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

The idea behind ICU Medical and Alcon AG 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.