Correlation Between Outset Medical and STAAR Surgical

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

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

Diversification Opportunities for Outset Medical and STAAR Surgical

-0.45

Correlation Coefficient

Outset Medical  STAAR Surgical

Very good diversification

The 3 months correlation between Outset and STAAR is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and STAAR Surgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STAAR Surgical 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 STAAR Surgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STAAR Surgical has no effect on the direction of Outset Medical i.e., Outset Medical and STAAR Surgical go up and down completely randomly.

Pair Corralation between Outset Medical and STAAR Surgical

Allowing for the 90-day total investment horizon Outset Medical is expected to generate 2.14 times more return on investment than STAAR Surgical. However, Outset Medical is 2.14 times more volatile than STAAR Surgical. It trades about 0.15 of its potential returns per unit of risk. STAAR Surgical is currently generating about -0.03 per unit of risk. If you would invest  53.00  in Outset Medical on September 3, 2024 and sell it today you would earn a total of  37.00  from holding Outset Medical or generate 69.81% return on investment over 90 days.

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

Outset Medical  vs.  STAAR Surgical

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 unfluctuating primary indicators, Outset Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

STAAR Surgical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STAAR Surgical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Outset Medical and STAAR Surgical

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

The idea behind Outset Medical and STAAR Surgical 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.