Correlation Between Top Glove and ICU Medical
Can any of the company-specific risk be diversified away by investing in both Top Glove and ICU 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 Top Glove and ICU Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Glove and ICU Medical, you can compare the effects of market volatilities on Top Glove and ICU 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 Top Glove with a short position of ICU Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Glove and ICU Medical.
Diversification Opportunities for Top Glove and ICU Medical
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Top and ICU is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Top Glove and ICU Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICU Medical and Top Glove 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 Top Glove are associated (or correlated) with ICU Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICU Medical has no effect on the direction of Top Glove i.e., Top Glove and ICU Medical go up and down completely randomly.
Pair Corralation between Top Glove and ICU Medical
Assuming the 90 days horizon Top Glove is expected to generate 3.63 times more return on investment than ICU Medical. However, Top Glove is 3.63 times more volatile than ICU Medical. It trades about 0.05 of its potential returns per unit of risk. ICU Medical is currently generating about 0.01 per unit of risk. If you would invest 21.00 in Top Glove on August 28, 2024 and sell it today you would earn a total of 4.00 from holding Top Glove or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Glove vs. ICU Medical
Performance |
| Timeline |
| Top Glove |
| ICU Medical |
Top Glove and ICU Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Glove and ICU Medical
The main advantage of trading using opposite Top Glove and ICU Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Glove position performs unexpectedly, ICU 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 ICU Medical will offset losses from the drop in ICU Medical's long position.| Top Glove vs. Sabre Corpo | Top Glove vs. Supercom | Top Glove vs. ATRenew Inc DRC | Top Glove vs. Fast Retailing Co |
| ICU Medical vs. Merit Medical Systems | ICU Medical vs. The Cooper Companies, | ICU Medical vs. AngioDynamics | ICU Medical vs. AptarGroup |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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