Correlation Between Outset Medical and Heartbeam Warrant

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Can any of the company-specific risk be diversified away by investing in both Outset Medical and Heartbeam Warrant 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 Outset Medical and Heartbeam Warrant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and Heartbeam Warrant, you can compare the effects of market volatilities on Outset Medical and Heartbeam Warrant 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 Outset Medical with a short position of Heartbeam Warrant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and Heartbeam Warrant.

Diversification Opportunities for Outset Medical and Heartbeam Warrant

OutsetHeartbeamDiversified AwayOutsetHeartbeamDiversified Away100%
0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Outset and Heartbeam is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Heartbeam Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartbeam Warrant and Outset Medical 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 Outset Medical are associated (or correlated) with Heartbeam Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartbeam Warrant has no effect on the direction of Outset Medical i.e., Outset Medical and Heartbeam Warrant go up and down completely randomly.

Pair Corralation between Outset Medical and Heartbeam Warrant

Allowing for the 90-day total investment horizon Outset Medical is expected to generate 0.82 times more return on investment than Heartbeam Warrant. However, Outset Medical is 1.22 times less risky than Heartbeam Warrant. It trades about 0.22 of its potential returns per unit of risk. Heartbeam Warrant is currently generating about 0.08 per unit of risk. If you would invest  52.00  in Outset Medical on September 23, 2024 and sell it today you would earn a total of  69.00  from holding Outset Medical or generate 132.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy92.31%
ValuesDaily Returns

Outset Medical  vs.  Heartbeam Warrant

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 050100
JavaScript chart by amCharts 3.21.15OM BEATW
       Timeline  
Outset Medical 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Outset Medical are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Outset Medical displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.50.60.70.80.911.11.21.31.4
Heartbeam Warrant 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Heartbeam Warrant are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Heartbeam Warrant showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.40.50.60.70.80.9

Outset Medical and Heartbeam Warrant Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-21.91-16.41-10.91-5.410.05.8311.8617.8923.9329.96 0.00500.00550.00600.00650.00700.0075
JavaScript chart by amCharts 3.21.15OM BEATW
       Returns  

Pair Trading with Outset Medical and Heartbeam Warrant

The main advantage of trading using opposite Outset Medical and Heartbeam Warrant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, Heartbeam Warrant 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 Heartbeam Warrant will offset losses from the drop in Heartbeam Warrant's long position.
The idea behind Outset Medical and Heartbeam Warrant 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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