Correlation Between Repro Med and Pulse Biosciences

Can any of the company-specific risk be diversified away by investing in both Repro Med and Pulse Biosciences 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 Pulse Biosciences 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 Pulse Biosciences, you can compare the effects of market volatilities on Repro Med and Pulse Biosciences 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 Pulse Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Repro Med and Pulse Biosciences.

Diversification Opportunities for Repro Med and Pulse Biosciences

0.44

Correlation Coefficient

Repro Med  Pulse Biosciences

Very weak diversification

The 3 months correlation between Repro and Pulse is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Repro Med Systems and Pulse Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulse Biosciences 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 Pulse Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulse Biosciences has no effect on the direction of Repro Med i.e., Repro Med and Pulse Biosciences go up and down completely randomly.

Pair Corralation between Repro Med and Pulse Biosciences

Given the investment horizon of 90 days Repro Med Systems is expected to generate 0.8 times more return on investment than Pulse Biosciences. However, Repro Med Systems is 1.25 times less risky than Pulse Biosciences. It trades about 0.22 of its potential returns per unit of risk. Pulse Biosciences is currently generating about 0.04 per unit of risk. If you would invest  249.00  in Repro Med Systems on October 23, 2024 and sell it today you would earn a total of  160.00  from holding Repro Med Systems or generate 64.26% return on investment over 90 days.

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

Repro Med Systems  vs.  Pulse Biosciences

Repro Med Systems

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Repro Med Systems are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Repro Med exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pulse Biosciences

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pulse Biosciences are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Pulse Biosciences exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Repro Med and Pulse Biosciences

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

The idea behind Repro Med Systems and Pulse Biosciences 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.