Correlation Between ResMed and Fonar

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Can any of the company-specific risk be diversified away by investing in both ResMed and Fonar 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 ResMed and Fonar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ResMed Inc and Fonar, you can compare the effects of market volatilities on ResMed and Fonar 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 ResMed with a short position of Fonar. Check out your portfolio center. Please also check ongoing floating volatility patterns of ResMed and Fonar.

Diversification Opportunities for ResMed and Fonar

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between ResMed and Fonar is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ResMed Inc and Fonar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fonar and ResMed 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 ResMed Inc are associated (or correlated) with Fonar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fonar has no effect on the direction of ResMed i.e., ResMed and Fonar go up and down completely randomly.

Pair Corralation between ResMed and Fonar

Considering the 90-day investment horizon ResMed Inc is expected to generate 1.04 times more return on investment than Fonar. However, ResMed is 1.04 times more volatile than Fonar. It trades about 0.02 of its potential returns per unit of risk. Fonar is currently generating about 0.0 per unit of risk. If you would invest  21,780  in ResMed Inc on September 10, 2024 and sell it today you would earn a total of  2,361  from holding ResMed Inc or generate 10.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

ResMed Inc  vs.  Fonar

 Performance 
       Timeline  
ResMed Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ResMed Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, ResMed is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
Fonar 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fonar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fonar is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

ResMed and Fonar Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ResMed and Fonar

The main advantage of trading using opposite ResMed and Fonar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ResMed position performs unexpectedly, Fonar 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 Fonar will offset losses from the drop in Fonar's long position.
The idea behind ResMed Inc and Fonar 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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