Correlation Between SurModics and Biomerica

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

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

Diversification Opportunities for SurModics and Biomerica

-0.79

Correlation Coefficient

SurModics  Biomerica

Pay attention - limited upside

The 3 months correlation between SurModics and Biomerica is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding SurModics and Biomerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomerica and SurModics 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 SurModics are associated (or correlated) with Biomerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomerica has no effect on the direction of SurModics i.e., SurModics and Biomerica go up and down completely randomly.

Pair Corralation between SurModics and Biomerica

Given the investment horizon of 90 days SurModics is expected to under-perform the Biomerica. But the stock apears to be less risky and, when comparing its historical volatility, SurModics is 9.14 times less risky than Biomerica. The stock trades about -0.16 of its potential returns per unit of risk. The Biomerica is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  41.00  in Biomerica on December 1, 2024 and sell it today you would earn a total of  32.00  from holding Biomerica or generate 78.05% return on investment over 90 days.

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

SurModics  vs.  Biomerica

SurModics

Risk-Adjusted Performance

Very Weak

Over the last 90 days SurModics 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Biomerica

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biomerica are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Biomerica sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SurModics and Biomerica

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

The idea behind SurModics and Biomerica 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.