Correlation Between SurModics and Nexalin Technology

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

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

Diversification Opportunities for SurModics and Nexalin Technology

0.33

Correlation Coefficient

SurModics  Nexalin Technology

Weak diversification

The 3 months correlation between SurModics and Nexalin is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding SurModics and Nexalin Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexalin Technology 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 Nexalin Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexalin Technology has no effect on the direction of SurModics i.e., SurModics and Nexalin Technology go up and down completely randomly.

Pair Corralation between SurModics and Nexalin Technology

Given the investment horizon of 90 days SurModics is expected to generate 6.77 times less return on investment than Nexalin Technology. But when comparing it to its historical volatility, SurModics is 4.14 times less risky than Nexalin Technology. It trades about 0.04 of its potential returns per unit of risk. Nexalin Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  89.00  in Nexalin Technology on November 19, 2024 and sell it today you would earn a total of  242.00  from holding Nexalin Technology or generate 271.91% return on investment over 90 days.

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

SurModics  vs.  Nexalin Technology

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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nexalin Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexalin Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Nexalin Technology is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SurModics and Nexalin Technology

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

The idea behind SurModics and Nexalin Technology 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.