Correlation Between Outset Medical and Enzo Biochem

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

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

Diversification Opportunities for Outset Medical and Enzo Biochem

-0.44

Correlation Coefficient

Outset Medical  Enzo Biochem

Very good diversification

The 3 months correlation between Outset and Enzo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Enzo Biochem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enzo Biochem 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 Enzo Biochem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enzo Biochem has no effect on the direction of Outset Medical i.e., Outset Medical and Enzo Biochem go up and down completely randomly.

Pair Corralation between Outset Medical and Enzo Biochem

Allowing for the 90-day total investment horizon Outset Medical is expected to under-perform the Enzo Biochem. In addition to that, Outset Medical is 2.83 times more volatile than Enzo Biochem. It trades about -0.03 of its total potential returns per unit of risk. Enzo Biochem is currently generating about -0.05 per unit of volatility. If you would invest  98.00  in Enzo Biochem on September 30, 2024 and sell it today you would lose (25.00) from holding Enzo Biochem or give up 25.51% of portfolio value over 90 days.

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

Outset Medical  vs.  Enzo Biochem

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.

Enzo Biochem

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enzo Biochem has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Outset Medical and Enzo Biochem

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

The idea behind Outset Medical and Enzo Biochem 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 Commodity Directory module to find actively traded commodities issued by global exchanges.