Correlation Between STAAR Surgical and ICU Medical

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

By analyzing existing cross correlation between STAAR Surgical and ICU Medical, you can compare the effects of market volatilities on STAAR Surgical and ICU Medical 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 STAAR Surgical with a short position of ICU Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of STAAR Surgical and ICU Medical.

Diversification Opportunities for STAAR Surgical and ICU Medical

0.82

Correlation Coefficient

STAAR Surgical  ICU Medical

Very poor diversification

The 3 months correlation between STAAR and ICU is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding STAAR Surgical and ICU Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICU Medical and STAAR Surgical 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 STAAR Surgical are associated (or correlated) with ICU Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICU Medical has no effect on the direction of STAAR Surgical i.e., STAAR Surgical and ICU Medical go up and down completely randomly.

Pair Corralation between STAAR Surgical and ICU Medical

Given the investment horizon of 90 days STAAR Surgical is expected to under-perform the ICU Medical. In addition to that, STAAR Surgical is 1.69 times more volatile than ICU Medical. It trades about -0.18 of its total potential returns per unit of risk. ICU Medical is currently generating about 0.0 per unit of volatility. If you would invest  15,775  in ICU Medical on September 27, 2024 and sell it today you would lose (86.00) from holding ICU Medical or give up 0.55% of portfolio value over 90 days.

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

STAAR Surgical  vs.  ICU Medical

STAAR Surgical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STAAR Surgical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ICU Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICU Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with STAAR Surgical and ICU Medical

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

The idea behind STAAR Surgical and ICU Medical 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.