Correlation Between Utah Medical and Repro Med

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

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

Diversification Opportunities for Utah Medical and Repro Med

-0.18

Correlation Coefficient

Utah Medical  Repro Med

Good diversification

The 3 months correlation between Utah and Repro is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Utah Medical Products and Repro Med Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repro Med Systems and Utah 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 Utah Medical Products are associated (or correlated) with Repro Med. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repro Med Systems has no effect on the direction of Utah Medical i.e., Utah Medical and Repro Med go up and down completely randomly.

Pair Corralation between Utah Medical and Repro Med

Given the investment horizon of 90 days Utah Medical Products is expected to under-perform the Repro Med. But the stock apears to be less risky and, when comparing its historical volatility, Utah Medical Products is 3.33 times less risky than Repro Med. The stock trades about -0.02 of its potential returns per unit of risk. The Repro Med Systems is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  244.00  in Repro Med Systems on September 2, 2024 and sell it today you would earn a total of  154.00  from holding Repro Med Systems or generate 63.11% return on investment over 90 days.

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

Utah Medical Products  vs.  Repro Med Systems

Utah Medical Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Utah Medical Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Utah Medical is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Repro Med Systems

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Repro Med Systems are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Repro Med exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Utah Medical and Repro Med

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

The idea behind Utah Medical Products and Repro Med 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.