Correlation Between Perimeter Medical and Ocumetics Technology

Can any of the company-specific risk be diversified away by investing in both Perimeter Medical and Ocumetics Technology 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 Ocumetics Technology 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 Ocumetics Technology Corp, you can compare the effects of market volatilities on Perimeter Medical and Ocumetics Technology 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 Ocumetics Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perimeter Medical and Ocumetics Technology.

Diversification Opportunities for Perimeter Medical and Ocumetics Technology

0.1

Correlation Coefficient

Perimeter Medical  Ocumetics Technology

Average diversification

The 3 months correlation between Perimeter and Ocumetics is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Perimeter Medical Imaging and Ocumetics Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocumetics Technology Corp 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 Ocumetics Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocumetics Technology Corp has no effect on the direction of Perimeter Medical i.e., Perimeter Medical and Ocumetics Technology go up and down completely randomly.

Pair Corralation between Perimeter Medical and Ocumetics Technology

Assuming the 90 days trading horizon Perimeter Medical Imaging is expected to under-perform the Ocumetics Technology. In addition to that, Perimeter Medical is 1.42 times more volatile than Ocumetics Technology Corp. It trades about -0.03 of its total potential returns per unit of risk. Ocumetics Technology Corp is currently generating about 0.01 per unit of volatility. If you would invest  35.00  in Ocumetics Technology Corp on September 8, 2024 and sell it today you would lose (3.00) from holding Ocumetics Technology Corp or give up 8.57% of portfolio value over 90 days.

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

Perimeter Medical Imaging  vs.  Ocumetics Technology Corp

Perimeter Medical Imaging

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perimeter Medical Imaging are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Perimeter Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Ocumetics Technology Corp

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ocumetics Technology Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ocumetics Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Perimeter Medical and Ocumetics Technology

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

The idea behind Perimeter Medical Imaging and Ocumetics Technology Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.