Correlation Between SANTAN and Tandem Diabetes

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

By analyzing existing cross correlation between SANTAN 3225 22 NOV 32 and Tandem Diabetes Care, you can compare the effects of market volatilities on SANTAN and Tandem Diabetes 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 SANTAN with a short position of Tandem Diabetes. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTAN and Tandem Diabetes.

Diversification Opportunities for SANTAN and Tandem Diabetes

-0.17

Correlation Coefficient

SANTAN  Tandem Diabetes

Good diversification

The 3 months correlation between SANTAN and Tandem is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SANTAN 3225 22 NOV 32 and Tandem Diabetes Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandem Diabetes Care and SANTAN 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 SANTAN 3225 22 NOV 32 are associated (or correlated) with Tandem Diabetes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandem Diabetes Care has no effect on the direction of SANTAN i.e., SANTAN and Tandem Diabetes go up and down completely randomly.

Pair Corralation between SANTAN and Tandem Diabetes

Assuming the 90 days trading horizon SANTAN 3225 22 NOV 32 is expected to under-perform the Tandem Diabetes. In addition to that, SANTAN is 2.65 times more volatile than Tandem Diabetes Care. It trades about -0.05 of its total potential returns per unit of risk. Tandem Diabetes Care is currently generating about 0.26 per unit of volatility. If you would invest  3,210  in Tandem Diabetes Care on October 10, 2024 and sell it today you would earn a total of  495.00  from holding Tandem Diabetes Care or generate 15.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.0%
Values	Daily Returns

SANTAN 3225 22 NOV 32  vs.  Tandem Diabetes Care

SANTAN 3225 22

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SANTAN 3225 22 NOV 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SANTAN 3225 22 NOV 32 investors.

Tandem Diabetes Care

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tandem Diabetes Care are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Tandem Diabetes is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SANTAN and Tandem Diabetes

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

The idea behind SANTAN 3225 22 NOV 32 and Tandem Diabetes Care 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.