Correlation Between Seach Medical and Brand

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

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

Diversification Opportunities for Seach Medical and Brand

0.71

Correlation Coefficient

Seach Medical  Brand

Poor diversification

The 3 months correlation between Seach and Brand is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Seach Medical Group and Brand Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brand Group and Seach Medical 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 Seach Medical Group are associated (or correlated) with Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brand Group has no effect on the direction of Seach Medical i.e., Seach Medical and Brand go up and down completely randomly.

Pair Corralation between Seach Medical and Brand

Assuming the 90 days trading horizon Seach Medical Group is expected to generate 1.16 times more return on investment than Brand. However, Seach Medical is 1.16 times more volatile than Brand Group. It trades about 0.41 of its potential returns per unit of risk. Brand Group is currently generating about 0.29 per unit of risk. If you would invest  19,590  in Seach Medical Group on September 25, 2024 and sell it today you would earn a total of  11,490  from holding Seach Medical Group or generate 58.65% return on investment over 90 days.

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

Seach Medical Group  vs.  Brand Group

Seach Medical Group

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Seach Medical Group are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Seach Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Brand Group

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brand Group are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brand sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Seach Medical and Brand

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

The idea behind Seach Medical Group and Brand Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.