Correlation Between Semler Scientific and MACYS

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

By analyzing existing cross correlation between Semler Scientific and MACYS RETAIL HLDGS, you can compare the effects of market volatilities on Semler Scientific and MACYS 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 Semler Scientific with a short position of MACYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semler Scientific and MACYS.

Diversification Opportunities for Semler Scientific and MACYS

-0.57

Correlation Coefficient

Semler Scientific  MACYS

Excellent diversification

The 3 months correlation between Semler and MACYS is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Semler Scientific and MACYS RETAIL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACYS RETAIL HLDGS and Semler Scientific 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 Semler Scientific are associated (or correlated) with MACYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACYS RETAIL HLDGS has no effect on the direction of Semler Scientific i.e., Semler Scientific and MACYS go up and down completely randomly.

Pair Corralation between Semler Scientific and MACYS

Given the investment horizon of 90 days Semler Scientific is expected to generate 6.05 times more return on investment than MACYS. However, Semler Scientific is 6.05 times more volatile than MACYS RETAIL HLDGS. It trades about 0.04 of its potential returns per unit of risk. MACYS RETAIL HLDGS is currently generating about 0.05 per unit of risk. If you would invest  6,123  in Semler Scientific on September 24, 2024 and sell it today you would earn a total of  55.00  from holding Semler Scientific or generate 0.9% return on investment over 90 days.

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

Semler Scientific  vs.  MACYS RETAIL HLDGS

Semler Scientific

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semler Scientific are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Semler Scientific reported solid returns over the last few months and may actually be approaching a breakup point.

MACYS RETAIL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MACYS RETAIL HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MACYS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Semler Scientific and MACYS

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

The idea behind Semler Scientific and MACYS RETAIL HLDGS 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.