Correlation Between SurModics and Tactile Systems

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

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

Diversification Opportunities for SurModics and Tactile Systems

0.32

Correlation Coefficient

SurModics  Tactile Systems

Weak diversification

The 3 months correlation between SurModics and Tactile is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SurModics and Tactile Systems Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tactile Systems Tech 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 Tactile Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tactile Systems Tech has no effect on the direction of SurModics i.e., SurModics and Tactile Systems go up and down completely randomly.

Pair Corralation between SurModics and Tactile Systems

Given the investment horizon of 90 days SurModics is expected to generate 0.66 times more return on investment than Tactile Systems. However, SurModics is 1.51 times less risky than Tactile Systems. It trades about -0.11 of its potential returns per unit of risk. Tactile Systems Technology is currently generating about -0.18 per unit of risk. If you would invest  3,945  in SurModics on November 28, 2024 and sell it today you would lose (391.00) from holding SurModics or give up 9.91% of portfolio value over 90 days.

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

SurModics  vs.  Tactile Systems 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 latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Tactile Systems Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tactile Systems Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with SurModics and Tactile Systems

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

The idea behind SurModics and Tactile Systems 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.