Correlation Between Nortech Systems and Modular Medical
Can any of the company-specific risk be diversified away by investing in both Nortech Systems and Modular 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 Nortech Systems and Modular Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nortech Systems Incorporated and Modular Medical, you can compare the effects of market volatilities on Nortech Systems and Modular 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 Nortech Systems with a short position of Modular Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nortech Systems and Modular Medical.
Diversification Opportunities for Nortech Systems and Modular Medical
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nortech and Modular is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nortech Systems Incorporated and Modular Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modular Medical and Nortech Systems 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 Nortech Systems Incorporated are associated (or correlated) with Modular Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modular Medical has no effect on the direction of Nortech Systems i.e., Nortech Systems and Modular Medical go up and down completely randomly.
Pair Corralation between Nortech Systems and Modular Medical
Given the investment horizon of 90 days Nortech Systems is expected to generate 2.02 times less return on investment than Modular Medical. But when comparing it to its historical volatility, Nortech Systems Incorporated is 1.66 times less risky than Modular Medical. It trades about 0.01 of its potential returns per unit of risk. Modular Medical is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 270.00 in Modular Medical on September 2, 2024 and sell it today you would lose (100.00) from holding Modular Medical or give up 37.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nortech Systems Incorporated vs. Modular Medical
Performance |
| Timeline |
| Nortech Systems |
| Modular Medical |
Nortech Systems and Modular Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nortech Systems and Modular Medical
The main advantage of trading using opposite Nortech Systems and Modular Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nortech Systems position performs unexpectedly, Modular 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 Modular Medical will offset losses from the drop in Modular Medical's long position.| Nortech Systems vs. Neuropace | Nortech Systems vs. Electromed | Nortech Systems vs. Orthopediatrics Corp | Nortech Systems vs. SurModics |
| Modular Medical vs. Neuropace | Modular Medical vs. Nexalin Technology | Modular Medical vs. STRATA Skin Sciences | Modular Medical vs. IRIDEX |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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