Correlation Between Republic Bancorp and Semler Scientific

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

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

Diversification Opportunities for Republic Bancorp and Semler Scientific

0.85

Correlation Coefficient

Republic Bancorp  Semler Scientific

Very poor diversification

The 3 months correlation between Republic and Semler is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Republic Bancorp and Semler Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semler Scientific and Republic Bancorp 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 Republic Bancorp are associated (or correlated) with Semler Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semler Scientific has no effect on the direction of Republic Bancorp i.e., Republic Bancorp and Semler Scientific go up and down completely randomly.

Pair Corralation between Republic Bancorp and Semler Scientific

Assuming the 90 days horizon Republic Bancorp is expected to generate 10.53 times less return on investment than Semler Scientific. But when comparing it to its historical volatility, Republic Bancorp is 3.28 times less risky than Semler Scientific. It trades about 0.07 of its potential returns per unit of risk. Semler Scientific is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,230  in Semler Scientific on September 23, 2024 and sell it today you would earn a total of  3,948  from holding Semler Scientific or generate 177.04% return on investment over 90 days.

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

Republic Bancorp  vs.  Semler Scientific

Republic Bancorp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Republic Bancorp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Republic Bancorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Semler Scientific

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semler Scientific are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Semler Scientific reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Republic Bancorp and Semler Scientific

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

The idea behind Republic Bancorp and Semler Scientific 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.