Correlation Between ICU Medical and DarioHealth Corp

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

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

Diversification Opportunities for ICU Medical and DarioHealth Corp

0.83

Correlation Coefficient

ICU Medical  DarioHealth Corp

Very poor diversification

The 3 months correlation between ICU and DarioHealth is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and DarioHealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DarioHealth Corp and ICU 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 ICU Medical are associated (or correlated) with DarioHealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DarioHealth Corp has no effect on the direction of ICU Medical i.e., ICU Medical and DarioHealth Corp go up and down completely randomly.

Pair Corralation between ICU Medical and DarioHealth Corp

Given the investment horizon of 90 days ICU Medical is expected to generate 0.45 times more return on investment than DarioHealth Corp. However, ICU Medical is 2.2 times less risky than DarioHealth Corp. It trades about 0.0 of its potential returns per unit of risk. DarioHealth Corp is currently generating about -0.04 per unit of risk. If you would invest  17,353  in ICU Medical on September 10, 2024 and sell it today you would lose (1,779) from holding ICU Medical or give up 10.25% of portfolio value over 90 days.

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

ICU Medical  vs.  DarioHealth Corp

ICU Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICU Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, ICU Medical is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

DarioHealth Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DarioHealth Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, DarioHealth Corp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ICU Medical and DarioHealth Corp

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

The idea behind ICU Medical and DarioHealth Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.