Correlation Between SARTORIUS and Resmed

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

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

Diversification Opportunities for SARTORIUS and Resmed

-0.24

Correlation Coefficient

SARTORIUS  Resmed

Very good diversification

The 3 months correlation between SARTORIUS and Resmed is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SARTORIUS AG UNSPADR and Resmed Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resmed Inc DRC and SARTORIUS 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 SARTORIUS AG UNSPADR are associated (or correlated) with Resmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resmed Inc DRC has no effect on the direction of SARTORIUS i.e., SARTORIUS and Resmed go up and down completely randomly.

Pair Corralation between SARTORIUS and Resmed

Assuming the 90 days trading horizon SARTORIUS AG UNSPADR is expected to generate 1.66 times more return on investment than Resmed. However, SARTORIUS is 1.66 times more volatile than Resmed Inc DRC. It trades about 0.1 of its potential returns per unit of risk. Resmed Inc DRC is currently generating about -0.06 per unit of risk. If you would invest  3,540  in SARTORIUS AG UNSPADR on October 12, 2024 and sell it today you would earn a total of  140.00  from holding SARTORIUS AG UNSPADR or generate 3.95% return on investment over 90 days.

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

SARTORIUS AG UNSPADR  vs.  Resmed Inc DRC

SARTORIUS AG UNSPADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SARTORIUS AG UNSPADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SARTORIUS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Resmed Inc DRC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Resmed Inc DRC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Resmed is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SARTORIUS and Resmed

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

The idea behind SARTORIUS AG UNSPADR and Resmed Inc DRC 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.