Correlation Between Resmed and ICU Medical

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

By analyzing existing cross correlation between Resmed Inc DRC and ICU Medical, you can compare the effects of market volatilities on Resmed and ICU 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 ICU Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resmed and ICU Medical.

Diversification Opportunities for Resmed and ICU Medical

0.0

Correlation Coefficient

Resmed  ICU Medical

Pay attention - limited upside

The 3 months correlation between Resmed and ICU is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Resmed Inc DRC and ICU Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICU Medical 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 DRC are associated (or correlated) with ICU Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICU Medical has no effect on the direction of Resmed i.e., Resmed and ICU Medical go up and down completely randomly.

Pair Corralation between Resmed and ICU Medical

If you would invest  1,770  in Resmed Inc DRC on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Resmed Inc DRC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Resmed Inc DRC  vs.  ICU Medical

Resmed Inc DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Resmed Inc DRC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Resmed is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

ICU Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICU Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, ICU Medical is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Resmed and ICU Medical

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

The idea behind Resmed Inc DRC and ICU 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.