Correlation Between Perimeter Medical and KDA

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

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

Diversification Opportunities for Perimeter Medical and KDA

-0.07

Correlation Coefficient

Perimeter Medical  KDA

Good diversification

The 3 months correlation between Perimeter and KDA is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Perimeter Medical Imaging and KDA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDA Group and Perimeter 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 Perimeter Medical Imaging are associated (or correlated) with KDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDA Group has no effect on the direction of Perimeter Medical i.e., Perimeter Medical and KDA go up and down completely randomly.

Pair Corralation between Perimeter Medical and KDA

Assuming the 90 days trading horizon Perimeter Medical Imaging is expected to under-perform the KDA. In addition to that, Perimeter Medical is 1.52 times more volatile than KDA Group. It trades about -0.3 of its total potential returns per unit of risk. KDA Group is currently generating about 0.3 per unit of volatility. If you would invest  25.00  in KDA Group on September 24, 2024 and sell it today you would earn a total of  5.00  from holding KDA Group or generate 20.0% return on investment over 90 days.

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

Perimeter Medical Imaging  vs.  KDA Group

Perimeter Medical Imaging

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Perimeter Medical Imaging are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Perimeter Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KDA Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KDA Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, KDA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Perimeter Medical and KDA

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

The idea behind Perimeter Medical Imaging and KDA Group 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.