Correlation Between Outset Medical and 908 Devices

Can any of the company-specific risk be diversified away by investing in both Outset Medical and 908 Devices 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 908 Devices into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Outset Medical and 908 Devices, you can compare the effects of market volatilities on Outset Medical and 908 Devices 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 908 Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and 908 Devices.

Diversification Opportunities for Outset Medical and 908 Devices

-0.72

Correlation Coefficient

Outset Medical  908 Devices

Pay attention - limited upside

The 3 months correlation between Outset and 908 is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and 908 Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 908 Devices 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 908 Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 908 Devices has no effect on the direction of Outset Medical i.e., Outset Medical and 908 Devices go up and down completely randomly.

Pair Corralation between Outset Medical and 908 Devices

Allowing for the 90-day total investment horizon Outset Medical is expected to under-perform the 908 Devices. But the stock apears to be less risky and, when comparing its historical volatility, Outset Medical is 1.98 times less risky than 908 Devices. The stock trades about -0.06 of its potential returns per unit of risk. The 908 Devices is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  203.00  in 908 Devices on December 26, 2024 and sell it today you would earn a total of  194.50  from holding 908 Devices or generate 95.81% return on investment over 90 days.

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

Outset Medical  vs.  908 Devices

Outset Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Outset Medical 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 very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

908 Devices

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 908 Devices are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, 908 Devices unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Outset Medical and 908 Devices

The main advantage of trading using opposite Outset Medical and 908 Devices positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, 908 Devices 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 908 Devices will offset losses from the drop in 908 Devices' long position.

The idea behind Outset Medical and 908 Devices 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.