Correlation Between SurModics and Heart Test

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

By analyzing existing cross correlation between SurModics and Heart Test Laboratories, you can compare the effects of market volatilities on SurModics and Heart Test 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 Heart Test. Check out your portfolio center. Please also check ongoing floating volatility patterns of SurModics and Heart Test.

Diversification Opportunities for SurModics and Heart Test

0.41

Correlation Coefficient

SurModics  Heart Test

Very weak diversification

The 3 months correlation between SurModics and Heart is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding SurModics and Heart Test Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heart Test Laboratories 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 Heart Test. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heart Test Laboratories has no effect on the direction of SurModics i.e., SurModics and Heart Test go up and down completely randomly.

Pair Corralation between SurModics and Heart Test

Given the investment horizon of 90 days SurModics is expected to generate 10.96 times less return on investment than Heart Test. But when comparing it to its historical volatility, SurModics is 12.58 times less risky than Heart Test. It trades about 0.13 of its potential returns per unit of risk. Heart Test Laboratories is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  293.00  in Heart Test Laboratories on October 7, 2024 and sell it today you would earn a total of  73.00  from holding Heart Test Laboratories or generate 24.91% return on investment over 90 days.

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

SurModics  vs.  Heart Test Laboratories

SurModics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SurModics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SurModics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Heart Test Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heart Test Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SurModics and Heart Test

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

The idea behind SurModics and Heart Test Laboratories 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.