Correlation Between SurModics and Biomerica

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

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

Diversification Opportunities for SurModics and Biomerica

0.09

Correlation Coefficient

SurModics  Biomerica

Significant diversification

The 3 months correlation between SurModics and Biomerica is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding SurModics and Biomerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomerica and SurModics 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 SurModics are associated (or correlated) with Biomerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomerica has no effect on the direction of SurModics i.e., SurModics and Biomerica go up and down completely randomly.

Pair Corralation between SurModics and Biomerica

Given the investment horizon of 90 days SurModics is expected to generate 3.45 times less return on investment than Biomerica. But when comparing it to its historical volatility, SurModics is 9.7 times less risky than Biomerica. It trades about 0.02 of its potential returns per unit of risk. Biomerica is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Biomerica on September 3, 2024 and sell it today you would lose (4.00) from holding Biomerica or give up 9.3% of portfolio value over 90 days.

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

SurModics  vs.  Biomerica

SurModics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SurModics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SurModics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Biomerica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biomerica has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Biomerica is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SurModics and Biomerica

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

The idea behind SurModics and Biomerica 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.