Correlation Between Heart Test and SurModics

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

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

Diversification Opportunities for Heart Test and SurModics

0.08

Correlation Coefficient

Heart Test  SurModics

Significant diversification

The 3 months correlation between Heart and SurModics is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Heart Test Laboratories and SurModics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SurModics and Heart Test 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 Heart Test Laboratories are associated (or correlated) with SurModics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SurModics has no effect on the direction of Heart Test i.e., Heart Test and SurModics go up and down completely randomly.

Pair Corralation between Heart Test and SurModics

Given the investment horizon of 90 days Heart Test Laboratories is expected to generate 13.91 times more return on investment than SurModics. However, Heart Test is 13.91 times more volatile than SurModics. It trades about 0.08 of its potential returns per unit of risk. SurModics is currently generating about 0.04 per unit of risk. If you would invest  294.00  in Heart Test Laboratories on September 21, 2024 and sell it today you would earn a total of  82.00  from holding Heart Test Laboratories or generate 27.89% return on investment over 90 days.

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

Heart Test Laboratories  vs.  SurModics

Heart Test Laboratories

Risk-Adjusted Performance

6 of 100

Modest

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

SurModics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SurModics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SurModics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Heart Test and SurModics

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

The idea behind Heart Test Laboratories and SurModics 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.