Correlation Between ResMed and G Medical

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

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

Diversification Opportunities for ResMed and G Medical

0.05

Correlation Coefficient

ResMed  G Medical

Significant diversification

The 3 months correlation between ResMed and GMVD is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding ResMed Inc and G Medical Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Medical Innovations 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 G Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Medical Innovations has no effect on the direction of ResMed i.e., ResMed and G Medical go up and down completely randomly.

Pair Corralation between ResMed and G Medical

If you would invest  24,437  in ResMed Inc on August 31, 2024 and sell it today you would earn a total of  496.00  from holding ResMed Inc or generate 2.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

ResMed Inc  vs.  G Medical Innovations

ResMed Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ResMed Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

G Medical Innovations

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ResMed and G Medical

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

The idea behind ResMed Inc and G Medical Innovations 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.