Correlation Between G Medical and ResMed

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

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

Diversification Opportunities for G Medical and ResMed

0.05

Correlation Coefficient

G Medical  ResMed

Significant diversification

The 3 months correlation between GMVD and ResMed is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding G Medical Innovations and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed Inc and G 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 G Medical Innovations are associated (or correlated) with ResMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ResMed Inc has no effect on the direction of G Medical i.e., G Medical and ResMed go up and down completely randomly.

Pair Corralation between G Medical and ResMed

If you would invest  24,437  in ResMed Inc on August 31, 2024 and sell it today you would earn a total of  496.00  from holding ResMed Inc or generate 2.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

G Medical Innovations  vs.  ResMed Inc

G Medical Innovations

Risk-Adjusted Performance

0 of 100

Very Weak

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

ResMed Inc

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with G Medical and ResMed

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

The idea behind G Medical Innovations and ResMed Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.