Correlation Between Outset Medical and RadNet

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

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

Diversification Opportunities for Outset Medical and RadNet

0.63

Correlation Coefficient

Outset Medical  RadNet

Poor diversification

The 3 months correlation between Outset and RadNet is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet Inc 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 RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of Outset Medical i.e., Outset Medical and RadNet go up and down completely randomly.

Pair Corralation between Outset Medical and RadNet

Allowing for the 90-day total investment horizon Outset Medical is expected to under-perform the RadNet. In addition to that, Outset Medical is 3.13 times more volatile than RadNet Inc. It trades about -0.03 of its total potential returns per unit of risk. RadNet Inc is currently generating about 0.07 per unit of volatility. If you would invest  5,855  in RadNet Inc on September 29, 2024 and sell it today you would earn a total of  1,272  from holding RadNet Inc or generate 21.73% return on investment over 90 days.

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

Outset Medical  vs.  RadNet Inc

Outset Medical

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Outset Medical are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, Outset Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

RadNet Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RadNet Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, RadNet is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Outset Medical and RadNet

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

The idea behind Outset Medical and RadNet Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..