Correlation Between INTUITIVE SURGICAL and Banpu PCL

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

By analyzing existing cross correlation between INTUITIVE SURGICAL and Banpu PCL, you can compare the effects of market volatilities on INTUITIVE SURGICAL and Banpu PCL 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 Banpu PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTUITIVE SURGICAL and Banpu PCL.

Diversification Opportunities for INTUITIVE SURGICAL and Banpu PCL

0.28

Correlation Coefficient

INTUITIVE SURGICAL  Banpu PCL

Modest diversification

The 3 months correlation between INTUITIVE and Banpu is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding INTUITIVE SURGICAL and Banpu PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banpu PCL 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 Banpu PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banpu PCL has no effect on the direction of INTUITIVE SURGICAL i.e., INTUITIVE SURGICAL and Banpu PCL go up and down completely randomly.

Pair Corralation between INTUITIVE SURGICAL and Banpu PCL

Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to generate 0.48 times more return on investment than Banpu PCL. However, INTUITIVE SURGICAL is 2.07 times less risky than Banpu PCL. It trades about -0.08 of its potential returns per unit of risk. Banpu PCL is currently generating about -0.11 per unit of risk. If you would invest  51,500  in INTUITIVE SURGICAL on December 24, 2024 and sell it today you would lose (6,330) from holding INTUITIVE SURGICAL or give up 12.29% of portfolio value over 90 days.

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

INTUITIVE SURGICAL  vs.  Banpu PCL

INTUITIVE SURGICAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTUITIVE SURGICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Banpu PCL

Risk-Adjusted Performance

Very Weak

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

Pair Trading with INTUITIVE SURGICAL and Banpu PCL

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

The idea behind INTUITIVE SURGICAL and Banpu PCL 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.