Correlation Between Nu Med and Modular Medical

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

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

Diversification Opportunities for Nu Med and Modular Medical

0.65

Correlation Coefficient

Nu Med  Modular Medical

Poor diversification

The 3 months correlation between NUMD and Modular is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nu Med Plus and Modular Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modular Medical and Nu 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 Nu Med Plus are associated (or correlated) with Modular Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modular Medical has no effect on the direction of Nu Med i.e., Nu Med and Modular Medical go up and down completely randomly.

Pair Corralation between Nu Med and Modular Medical

Given the investment horizon of 90 days Nu Med Plus is expected to under-perform the Modular Medical. In addition to that, Nu Med is 4.66 times more volatile than Modular Medical. It trades about -0.12 of its total potential returns per unit of risk. Modular Medical is currently generating about -0.24 per unit of volatility. If you would invest  168.00  in Modular Medical on October 10, 2024 and sell it today you would lose (28.00) from holding Modular Medical or give up 16.67% of portfolio value over 90 days.

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

Nu Med Plus  vs.  Modular Medical

Nu Med Plus

Risk-Adjusted Performance

0 of 100

Very Weak

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

Modular Medical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nu Med and Modular Medical

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

The idea behind Nu Med Plus and Modular Medical 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.