Correlation Between Repro Med and OraSure Technologies

Can any of the company-specific risk be diversified away by investing in both Repro Med and OraSure Technologies 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 Repro Med and OraSure Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Repro Med Systems and OraSure Technologies, you can compare the effects of market volatilities on Repro Med and OraSure Technologies 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 Repro Med with a short position of OraSure Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Repro Med and OraSure Technologies.

Diversification Opportunities for Repro Med and OraSure Technologies

0.71

Correlation Coefficient

Repro Med  OraSure Technologies

Poor diversification

The 3 months correlation between Repro and OraSure is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Repro Med Systems and OraSure Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OraSure Technologies and Repro Med 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 Repro Med Systems are associated (or correlated) with OraSure Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OraSure Technologies has no effect on the direction of Repro Med i.e., Repro Med and OraSure Technologies go up and down completely randomly.

Pair Corralation between Repro Med and OraSure Technologies

Given the investment horizon of 90 days Repro Med Systems is expected to under-perform the OraSure Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Repro Med Systems is 1.07 times less risky than OraSure Technologies. The stock trades about -0.11 of its potential returns per unit of risk. The OraSure Technologies is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  364.00  in OraSure Technologies on December 20, 2024 and sell it today you would lose (10.00) from holding OraSure Technologies or give up 2.75% of portfolio value over 90 days.

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

Repro Med Systems  vs.  OraSure Technologies

Repro Med Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Repro Med Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

OraSure Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days OraSure Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, OraSure Technologies is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Repro Med and OraSure Technologies

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

The idea behind Repro Med Systems and OraSure Technologies 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.