Correlation Between PULSION Medical and SPECTRAL MEDICAL

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

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

Diversification Opportunities for PULSION Medical and SPECTRAL MEDICAL

0.3

Correlation Coefficient

PULSION Medical  SPECTRAL MEDICAL

Weak diversification

The 3 months correlation between PULSION and SPECTRAL is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding PULSION Medical Systems and SPECTRAL MEDICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPECTRAL MEDICAL and PULSION 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 PULSION Medical Systems are associated (or correlated) with SPECTRAL MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPECTRAL MEDICAL has no effect on the direction of PULSION Medical i.e., PULSION Medical and SPECTRAL MEDICAL go up and down completely randomly.

Pair Corralation between PULSION Medical and SPECTRAL MEDICAL

Assuming the 90 days trading horizon PULSION Medical is expected to generate 55.11 times less return on investment than SPECTRAL MEDICAL. But when comparing it to its historical volatility, PULSION Medical Systems is 10.07 times less risky than SPECTRAL MEDICAL. It trades about 0.02 of its potential returns per unit of risk. SPECTRAL MEDICAL is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  30.00  in SPECTRAL MEDICAL on December 22, 2024 and sell it today you would earn a total of  11.00  from holding SPECTRAL MEDICAL or generate 36.67% return on investment over 90 days.

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

PULSION Medical Systems  vs.  SPECTRAL MEDICAL

PULSION Medical Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PULSION Medical Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PULSION Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SPECTRAL MEDICAL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPECTRAL MEDICAL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SPECTRAL MEDICAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PULSION Medical and SPECTRAL MEDICAL

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

The idea behind PULSION Medical Systems and SPECTRAL 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.