Correlation Between INTUITIVE SURGICAL and China Resources

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

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

Diversification Opportunities for INTUITIVE SURGICAL and China Resources

-0.78

Correlation Coefficient

INTUITIVE SURGICAL  China Resources

Pay attention - limited upside

The 3 months correlation between INTUITIVE and China is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding INTUITIVE SURGICAL and China Resources Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Land and INTUITIVE SURGICAL 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 INTUITIVE SURGICAL are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Land has no effect on the direction of INTUITIVE SURGICAL i.e., INTUITIVE SURGICAL and China Resources go up and down completely randomly.

Pair Corralation between INTUITIVE SURGICAL and China Resources

Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to under-perform the China Resources. But the stock apears to be less risky and, when comparing its historical volatility, INTUITIVE SURGICAL is 1.49 times less risky than China Resources. The stock trades about -0.08 of its potential returns per unit of risk. The China Resources Land is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  284.00  in China Resources Land on October 5, 2024 and sell it today you would lose (6.00) from holding China Resources Land or give up 2.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

INTUITIVE SURGICAL  vs.  China Resources Land

INTUITIVE SURGICAL

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days INTUITIVE SURGICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile technical and fundamental indicators, INTUITIVE SURGICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

China Resources Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Resources Land has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with INTUITIVE SURGICAL and China Resources

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

The idea behind INTUITIVE SURGICAL and China Resources Land 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.