Correlation Between TransMedics and Delcath Systems

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

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

Diversification Opportunities for TransMedics and Delcath Systems

-0.4

Correlation Coefficient

TransMedics  Delcath Systems

Very good diversification

The 3 months correlation between TransMedics and Delcath is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding TransMedics Group and Delcath Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delcath Systems and TransMedics 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 TransMedics Group are associated (or correlated) with Delcath Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delcath Systems has no effect on the direction of TransMedics i.e., TransMedics and Delcath Systems go up and down completely randomly.

Pair Corralation between TransMedics and Delcath Systems

Given the investment horizon of 90 days TransMedics Group is expected to under-perform the Delcath Systems. In addition to that, TransMedics is 1.49 times more volatile than Delcath Systems. It trades about -0.15 of its total potential returns per unit of risk. Delcath Systems is currently generating about 0.07 per unit of volatility. If you would invest  1,056  in Delcath Systems on September 3, 2024 and sell it today you would earn a total of  132.00  from holding Delcath Systems or generate 12.5% return on investment over 90 days.

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

TransMedics Group  vs.  Delcath Systems

TransMedics Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TransMedics Group 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Delcath Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Delcath Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Delcath Systems demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TransMedics and Delcath Systems

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

The idea behind TransMedics Group and Delcath Systems 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.