Correlation Between Outset Medical and OraSure Technologies
Can any of the company-specific risk be diversified away by investing in both Outset Medical and OraSure Technologies 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 Outset Medical and OraSure Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset Medical and OraSure Technologies, you can compare the effects of market volatilities on Outset Medical and OraSure Technologies 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 Outset Medical with a short position of OraSure Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset Medical and OraSure Technologies.
Diversification Opportunities for Outset Medical and OraSure Technologies
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Outset and OraSure is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and OraSure Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OraSure Technologies and Outset 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 Outset Medical are associated (or correlated) with OraSure Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OraSure Technologies has no effect on the direction of Outset Medical i.e., Outset Medical and OraSure Technologies go up and down completely randomly.
Pair Corralation between Outset Medical and OraSure Technologies
Allowing for the 90-day total investment horizon Outset Medical is expected to generate 2.93 times more return on investment than OraSure Technologies. However, Outset Medical is 2.93 times more volatile than OraSure Technologies. It trades about 0.3 of its potential returns per unit of risk. OraSure Technologies is currently generating about -0.07 per unit of risk. If you would invest 73.00 in Outset Medical on September 21, 2024 and sell it today you would earn a total of 42.00 from holding Outset Medical or generate 57.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Outset Medical vs. OraSure Technologies
Performance |
| Timeline |
| Outset Medical |
| OraSure Technologies |
Outset Medical and OraSure Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Outset Medical and OraSure Technologies
The main advantage of trading using opposite Outset Medical and OraSure Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset Medical position performs unexpectedly, OraSure Technologies 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 OraSure Technologies will offset losses from the drop in OraSure Technologies' long position.The idea behind Outset Medical and OraSure Technologies 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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