Correlation Between Penumbra and Quidel

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

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

Diversification Opportunities for Penumbra and Quidel

-0.61

Correlation Coefficient

Penumbra  Quidel

Excellent diversification

The 3 months correlation between Penumbra and Quidel is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Penumbra and Quidel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quidel 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 Quidel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quidel has no effect on the direction of Penumbra i.e., Penumbra and Quidel go up and down completely randomly.

Pair Corralation between Penumbra and Quidel

Considering the 90-day investment horizon Penumbra is expected to generate 0.68 times more return on investment than Quidel. However, Penumbra is 1.48 times less risky than Quidel. It trades about 0.21 of its potential returns per unit of risk. Quidel is currently generating about -0.01 per unit of risk. If you would invest  18,706  in Penumbra on September 17, 2024 and sell it today you would earn a total of  6,018  from holding Penumbra or generate 32.17% return on investment over 90 days.

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

Penumbra  vs.  Quidel

Penumbra

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Penumbra are ranked lower than 16 (%) 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.

Quidel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quidel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Quidel is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Penumbra and Quidel

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

The idea behind Penumbra and Quidel 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.