Correlation Between Intuitive Surgical and Hoya Corp

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

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

Diversification Opportunities for Intuitive Surgical and Hoya Corp

-0.64

Correlation Coefficient

Intuitive Surgical  Hoya Corp

Excellent diversification

The 3 months correlation between Intuitive and Hoya is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Surgical and Hoya Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoya Corp and Intuitive Surgical 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 Intuitive Surgical are associated (or correlated) with Hoya Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoya Corp has no effect on the direction of Intuitive Surgical i.e., Intuitive Surgical and Hoya Corp go up and down completely randomly.

Pair Corralation between Intuitive Surgical and Hoya Corp

Given the investment horizon of 90 days Intuitive Surgical is expected to generate 0.94 times more return on investment than Hoya Corp. However, Intuitive Surgical is 1.06 times less risky than Hoya Corp. It trades about 0.11 of its potential returns per unit of risk. Hoya Corp is currently generating about -0.04 per unit of risk. If you would invest  48,344  in Intuitive Surgical on September 3, 2024 and sell it today you would earn a total of  5,856  from holding Intuitive Surgical or generate 12.11% return on investment over 90 days.

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

Intuitive Surgical  vs.  Hoya Corp

Intuitive Surgical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Surgical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Intuitive Surgical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hoya Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hoya Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Hoya Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intuitive Surgical and Hoya Corp

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

The idea behind Intuitive Surgical and Hoya 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.