Correlation Between Si Bone and TransMedics

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

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

Diversification Opportunities for Si Bone and TransMedics

-0.12

Correlation Coefficient

Si Bone  TransMedics

Good diversification

The 3 months correlation between SIBN and TransMedics is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Si Bone and TransMedics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransMedics Group and Si Bone 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 Si Bone are associated (or correlated) with TransMedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransMedics Group has no effect on the direction of Si Bone i.e., Si Bone and TransMedics go up and down completely randomly.

Pair Corralation between Si Bone and TransMedics

Given the investment horizon of 90 days Si Bone is expected to under-perform the TransMedics. But the stock apears to be less risky and, when comparing its historical volatility, Si Bone is 1.6 times less risky than TransMedics. The stock trades about -0.01 of its potential returns per unit of risk. The TransMedics Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,513  in TransMedics Group on October 5, 2024 and sell it today you would earn a total of  2,396  from holding TransMedics Group or generate 53.09% return on investment over 90 days.

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

Si Bone  vs.  TransMedics Group

Si Bone

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Si Bone are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, Si Bone may actually be approaching a critical reversion point that can send shares even higher in February 2025.

TransMedics Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TransMedics Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Si Bone and TransMedics

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

The idea behind Si Bone and TransMedics 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.