Correlation Between TransMedics and Si Bone

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

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

Diversification Opportunities for TransMedics and Si Bone

-0.12

Correlation Coefficient

TransMedics  Si Bone

Good diversification

The 3 months correlation between TransMedics and SIBN is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding TransMedics Group and Si Bone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Si Bone 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 Si Bone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Si Bone has no effect on the direction of TransMedics i.e., TransMedics and Si Bone go up and down completely randomly.

Pair Corralation between TransMedics and Si Bone

Given the investment horizon of 90 days TransMedics Group is expected to generate 1.6 times more return on investment than Si Bone. However, TransMedics is 1.6 times more volatile than Si Bone. It trades about 0.05 of its potential returns per unit of risk. Si Bone is currently generating about -0.01 per unit of risk. If you would invest  4,513  in TransMedics Group on October 5, 2024 and sell it today you would earn a total of  2,396  from holding TransMedics Group or generate 53.09% return on investment over 90 days.

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

TransMedics Group  vs.  Si Bone

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Si Bone

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Si Bone are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, Si Bone may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with TransMedics and Si Bone

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

The idea behind TransMedics Group and Si Bone 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.