Correlation Between Outset Medical and Hims Hers

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

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

Diversification Opportunities for Outset Medical and Hims Hers

0.77

Correlation Coefficient

Outset Medical  Hims Hers

Poor diversification

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

Pair Corralation between Outset Medical and Hims Hers

Allowing for the 90-day total investment horizon Outset Medical is expected to generate 1.42 times less return on investment than Hims Hers. But when comparing it to its historical volatility, Outset Medical is 1.01 times less risky than Hims Hers. It trades about 0.14 of its potential returns per unit of risk. Hims Hers Health is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,473  in Hims Hers Health on August 30, 2024 and sell it today you would earn a total of  1,561  from holding Hims Hers Health or generate 105.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Outset Medical  vs.  Hims Hers Health

Outset Medical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Outset Medical are ranked lower than 10 (%) 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.

Hims Hers Health

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hims Hers Health are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Hims Hers unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Outset Medical and Hims Hers

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

The idea behind Outset Medical and Hims Hers Health 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.