Correlation Between CONMED and Tactile Systems

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

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

Diversification Opportunities for CONMED and Tactile Systems

0.19

Correlation Coefficient

CONMED  Tactile Systems

Average diversification

The 3 months correlation between CONMED and Tactile is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CONMED and Tactile Systems Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tactile Systems Tech and CONMED 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 CONMED are associated (or correlated) with Tactile Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tactile Systems Tech has no effect on the direction of CONMED i.e., CONMED and Tactile Systems go up and down completely randomly.

Pair Corralation between CONMED and Tactile Systems

Given the investment horizon of 90 days CONMED is expected to generate 7.57 times less return on investment than Tactile Systems. But when comparing it to its historical volatility, CONMED is 1.31 times less risky than Tactile Systems. It trades about 0.03 of its potential returns per unit of risk. Tactile Systems Technology is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,350  in Tactile Systems Technology on August 31, 2024 and sell it today you would earn a total of  543.00  from holding Tactile Systems Technology or generate 40.22% return on investment over 90 days.

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

CONMED  vs.  Tactile Systems Technology

CONMED

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CONMED are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, CONMED is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Tactile Systems Tech

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tactile Systems Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Tactile Systems exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CONMED and Tactile Systems

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

The idea behind CONMED and Tactile Systems Technology 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.