Correlation Between TransMedics and Rxsight

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

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

Diversification Opportunities for TransMedics and Rxsight

0.61

Correlation Coefficient

TransMedics  Rxsight

Poor diversification

The 3 months correlation between TransMedics and Rxsight is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding TransMedics Group and Rxsight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rxsight 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 Rxsight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rxsight has no effect on the direction of TransMedics i.e., TransMedics and Rxsight go up and down completely randomly.

Pair Corralation between TransMedics and Rxsight

Given the investment horizon of 90 days TransMedics Group is expected to under-perform the Rxsight. In addition to that, TransMedics is 2.34 times more volatile than Rxsight. It trades about -0.15 of its total potential returns per unit of risk. Rxsight is currently generating about -0.1 per unit of volatility. If you would invest  5,388  in Rxsight on September 4, 2024 and sell it today you would lose (804.00) from holding Rxsight or give up 14.92% of portfolio value over 90 days.

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

TransMedics Group  vs.  Rxsight

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.

Rxsight

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rxsight has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with TransMedics and Rxsight

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

The idea behind TransMedics Group and Rxsight 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.