Correlation Between Intuitive Surgical and HEMISPHERE EGY

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

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

Diversification Opportunities for Intuitive Surgical and HEMISPHERE EGY

0.29

Correlation Coefficient

Intuitive Surgical  HEMISPHERE EGY

Modest diversification

The 3 months correlation between Intuitive and HEMISPHERE is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and HEMISPHERE EGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEMISPHERE EGY 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 HEMISPHERE EGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEMISPHERE EGY has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and HEMISPHERE EGY go up and down completely randomly.

Pair Corralation between Intuitive Surgical and HEMISPHERE EGY

Assuming the 90 days trading horizon Intuitive Surgical is expected to generate 2.15 times more return on investment than HEMISPHERE EGY. However, Intuitive Surgical is 2.15 times more volatile than HEMISPHERE EGY. It trades about 0.37 of its potential returns per unit of risk. HEMISPHERE EGY is currently generating about 0.05 per unit of risk. If you would invest  50,330  in Intuitive Surgical on October 21, 2024 and sell it today you would earn a total of  7,380  from holding Intuitive Surgical or generate 14.66% return on investment over 90 days.

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

Intuitive Surgical  vs.  HEMISPHERE EGY

Intuitive Surgical

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Intuitive Surgical reported solid returns over the last few months and may actually be approaching a breakup point.

HEMISPHERE EGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEMISPHERE EGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HEMISPHERE EGY is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Intuitive Surgical and HEMISPHERE EGY

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

The idea behind Intuitive Surgical and HEMISPHERE EGY 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.