Correlation Between Beyond Air and TransMedics

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

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

Diversification Opportunities for Beyond Air and TransMedics

-0.26

Correlation Coefficient

Beyond Air  TransMedics

Very good diversification

The 3 months correlation between Beyond and TransMedics is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Air and TransMedics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransMedics Group and Beyond Air 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 Beyond Air are associated (or correlated) with TransMedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransMedics Group has no effect on the direction of Beyond Air i.e., Beyond Air and TransMedics go up and down completely randomly.

Pair Corralation between Beyond Air and TransMedics

Given the investment horizon of 90 days Beyond Air is expected to under-perform the TransMedics. In addition to that, Beyond Air is 1.31 times more volatile than TransMedics Group. It trades about -0.07 of its total potential returns per unit of risk. TransMedics Group is currently generating about 0.08 per unit of volatility. If you would invest  5,928  in TransMedics Group on December 30, 2024 and sell it today you would earn a total of  930.00  from holding TransMedics Group or generate 15.69% return on investment over 90 days.

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

Beyond Air  vs.  TransMedics Group

Beyond Air

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beyond Air has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

TransMedics Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TransMedics Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, TransMedics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beyond Air and TransMedics

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

The idea behind Beyond Air and TransMedics Group 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.