Correlation Between ICU Medical and STAAR Surgical

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

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

Diversification Opportunities for ICU Medical and STAAR Surgical

0.42

Correlation Coefficient

ICU Medical  STAAR Surgical

Very weak diversification

The 3 months correlation between ICU and STAAR is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and STAAR Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STAAR Surgical 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 STAAR Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STAAR Surgical has no effect on the direction of ICU Medical i.e., ICU Medical and STAAR Surgical go up and down completely randomly.

Pair Corralation between ICU Medical and STAAR Surgical

Given the investment horizon of 90 days ICU Medical is expected to generate 0.52 times more return on investment than STAAR Surgical. However, ICU Medical is 1.94 times less risky than STAAR Surgical. It trades about 0.01 of its potential returns per unit of risk. STAAR Surgical is currently generating about -0.03 per unit of risk. If you would invest  16,309  in ICU Medical on September 2, 2024 and sell it today you would earn a total of  87.00  from holding ICU Medical or generate 0.53% return on investment over 90 days.

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

ICU Medical  vs.  STAAR Surgical

ICU Medical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ICU Medical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

STAAR Surgical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STAAR Surgical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with ICU Medical and STAAR Surgical

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

The idea behind ICU Medical and STAAR Surgical 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.