Correlation Between ResMed and Bovie Medical

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Can any of the company-specific risk be diversified away by investing in both ResMed and Bovie 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 Bovie 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 Bovie Medical, you can compare the effects of market volatilities on ResMed and Bovie 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 Bovie Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ResMed and Bovie Medical.

Diversification Opportunities for ResMed and Bovie Medical

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  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between ResMed and Bovie Medical

If you would invest  17,396  in ResMed Inc on December 30, 2023 and sell it today you would earn a total of  2,407  from holding ResMed Inc or generate 13.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

ResMed Inc  vs.  Bovie Medical

 Performance 
       Timeline  
ResMed Inc 

Risk-Adjusted Performance

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OK
Compared to the overall equity markets, risk-adjusted returns on investments in ResMed Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, ResMed exhibited solid returns over the last few months and may actually be approaching a breakup point.
Bovie Medical 

Risk-Adjusted Performance

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

ResMed and Bovie Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ResMed and Bovie Medical

The main advantage of trading using opposite ResMed and Bovie Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ResMed position performs unexpectedly, Bovie 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 Bovie Medical will offset losses from the drop in Bovie Medical's long position.
The idea behind ResMed Inc and Bovie 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.
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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