Correlation Between Insulet and Apyx Medical

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

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

Diversification Opportunities for Insulet and Apyx Medical

0.78

Correlation Coefficient

Insulet  Apyx Medical

Poor diversification

The 3 months correlation between Insulet and Apyx is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Insulet and Apyx Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apyx Medical and Insulet 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 Insulet are associated (or correlated) with Apyx Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apyx Medical has no effect on the direction of Insulet i.e., Insulet and Apyx Medical go up and down completely randomly.

Pair Corralation between Insulet and Apyx Medical

Given the investment horizon of 90 days Insulet is expected to generate 2.83 times less return on investment than Apyx Medical. But when comparing it to its historical volatility, Insulet is 3.92 times less risky than Apyx Medical. It trades about 0.17 of its potential returns per unit of risk. Apyx Medical is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  124.00  in Apyx Medical on September 12, 2024 and sell it today you would earn a total of  60.00  from holding Apyx Medical or generate 48.39% return on investment over 90 days.

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

Insulet  vs.  Apyx Medical

Insulet

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Insulet are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Insulet exhibited solid returns over the last few months and may actually be approaching a breakup point.

Apyx Medical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apyx Medical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Apyx Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Insulet and Apyx Medical

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

The idea behind Insulet and Apyx Medical 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.