Correlation Between Penumbra and Icecure Medical

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

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

Diversification Opportunities for Penumbra and Icecure Medical

0.49

Correlation Coefficient

Penumbra  Icecure Medical

Very weak diversification

The 3 months correlation between Penumbra and Icecure is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Penumbra and Icecure Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icecure Medical and Penumbra 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 Penumbra are associated (or correlated) with Icecure Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icecure Medical has no effect on the direction of Penumbra i.e., Penumbra and Icecure Medical go up and down completely randomly.

Pair Corralation between Penumbra and Icecure Medical

Considering the 90-day investment horizon Penumbra is expected to generate 0.19 times more return on investment than Icecure Medical. However, Penumbra is 5.39 times less risky than Icecure Medical. It trades about 0.25 of its potential returns per unit of risk. Icecure Medical is currently generating about 0.0 per unit of risk. If you would invest  22,951  in Penumbra on September 4, 2024 and sell it today you would earn a total of  1,573  from holding Penumbra or generate 6.85% return on investment over 90 days.

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

Penumbra  vs.  Icecure Medical

Penumbra

Risk-Adjusted Performance

11 of 100

Good

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

Icecure Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Icecure Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Icecure Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penumbra and Icecure Medical

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

The idea behind Penumbra and Icecure 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.