Correlation Between ICU Medical and Sharps Technology

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

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

Diversification Opportunities for ICU Medical and Sharps Technology

-0.02

Correlation Coefficient

ICU Medical  Sharps Technology

Good diversification

The 3 months correlation between ICU and Sharps is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and Sharps Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharps Technology 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 Sharps Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharps Technology has no effect on the direction of ICU Medical i.e., ICU Medical and Sharps Technology go up and down completely randomly.

Pair Corralation between ICU Medical and Sharps Technology

Given the investment horizon of 90 days ICU Medical is expected to generate 0.3 times more return on investment than Sharps Technology. However, ICU Medical is 3.32 times less risky than Sharps Technology. It trades about 0.01 of its potential returns per unit of risk. Sharps Technology is currently generating about -0.02 per unit of risk. If you would invest  15,402  in ICU Medical on September 10, 2024 and sell it today you would earn a total of  172.00  from holding ICU Medical or generate 1.12% return on investment over 90 days.

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

ICU Medical  vs.  Sharps Technology

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.

Sharps Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sharps Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ICU Medical and Sharps Technology

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

The idea behind ICU Medical and Sharps 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.