Correlation Between Outset Medical and Check Cap

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

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

Diversification Opportunities for Outset Medical and Check Cap

-0.77

Correlation Coefficient

Outset Medical  Check Cap

Pay attention - limited upside

The 3 months correlation between Outset and Check is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Check Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Cap and Outset 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 Outset Medical are associated (or correlated) with Check Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Cap has no effect on the direction of Outset Medical i.e., Outset Medical and Check Cap go up and down completely randomly.

Pair Corralation between Outset Medical and Check Cap

Allowing for the 90-day total investment horizon Outset Medical is expected to generate 1.55 times more return on investment than Check Cap. However, Outset Medical is 1.55 times more volatile than Check Cap. It trades about 0.14 of its potential returns per unit of risk. Check Cap is currently generating about -0.27 per unit of risk. If you would invest  53.00  in Outset Medical on September 1, 2024 and sell it today you would earn a total of  33.00  from holding Outset Medical or generate 62.26% return on investment over 90 days.

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

Outset Medical  vs.  Check Cap

Outset Medical

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Outset Medical are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Outset Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Check Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Check Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Outset Medical and Check Cap

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

The idea behind Outset Medical and Check Cap 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 CEOs Directory module to screen CEOs from public companies around the world.