Correlation Between Tenon Medical and SurModics

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

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

Diversification Opportunities for Tenon Medical and SurModics

0.1

Correlation Coefficient

Tenon Medical  SurModics

Average diversification

The 3 months correlation between Tenon and SurModics is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Tenon Medical and SurModics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SurModics and Tenon Medical 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 Tenon Medical are associated (or correlated) with SurModics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SurModics has no effect on the direction of Tenon Medical i.e., Tenon Medical and SurModics go up and down completely randomly.

Pair Corralation between Tenon Medical and SurModics

Given the investment horizon of 90 days Tenon Medical is expected to generate 22.25 times more return on investment than SurModics. However, Tenon Medical is 22.25 times more volatile than SurModics. It trades about 0.01 of its potential returns per unit of risk. SurModics is currently generating about 0.02 per unit of risk. If you would invest  385.00  in Tenon Medical on August 31, 2024 and sell it today you would lose (151.00) from holding Tenon Medical or give up 39.22% of portfolio value over 90 days.

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

Tenon Medical  vs.  SurModics

Tenon Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tenon Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Tenon Medical is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

SurModics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SurModics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SurModics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tenon Medical and SurModics

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

The idea behind Tenon Medical and SurModics 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.