Correlation Between ICU Medical and Fonar

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

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

Diversification Opportunities for ICU Medical and Fonar

-0.11

Correlation Coefficient

ICU Medical  Fonar

Good diversification

The 3 months correlation between ICU and Fonar is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and Fonar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fonar 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 Fonar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fonar has no effect on the direction of ICU Medical i.e., ICU Medical and Fonar go up and down completely randomly.

Pair Corralation between ICU Medical and Fonar

Given the investment horizon of 90 days ICU Medical is expected to under-perform the Fonar. But the stock apears to be less risky and, when comparing its historical volatility, ICU Medical is 1.29 times less risky than Fonar. The stock trades about -0.02 of its potential returns per unit of risk. The Fonar is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,649  in Fonar on September 6, 2024 and sell it today you would lose (24.00) from holding Fonar or give up 1.46% of portfolio value over 90 days.

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

ICU Medical  vs.  Fonar

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.

Fonar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fonar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fonar is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with ICU Medical and Fonar

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

The idea behind ICU Medical and Fonar 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 Valuation module to check real value of public entities based on technical and fundamental data.