Correlation Between SurModics and Semler Scientific

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

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

Diversification Opportunities for SurModics and Semler Scientific

0.83

Correlation Coefficient

SurModics  Semler Scientific

Very poor diversification

The 3 months correlation between SurModics and Semler is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SurModics and Semler Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semler Scientific 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 Semler Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semler Scientific has no effect on the direction of SurModics i.e., SurModics and Semler Scientific go up and down completely randomly.

Pair Corralation between SurModics and Semler Scientific

Given the investment horizon of 90 days SurModics is expected to generate 45.89 times less return on investment than Semler Scientific. But when comparing it to its historical volatility, SurModics is 15.13 times less risky than Semler Scientific. It trades about 0.07 of its potential returns per unit of risk. Semler Scientific is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,248  in Semler Scientific on October 1, 2024 and sell it today you would earn a total of  4,079  from holding Semler Scientific or generate 181.45% return on investment over 90 days.

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

SurModics  vs.  Semler Scientific

SurModics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SurModics are ranked lower than 5 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

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 inconsistent essential indicators, Semler Scientific reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SurModics and Semler Scientific

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

The idea behind SurModics and Semler Scientific 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.