Correlation Between HOYA and ResMed

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

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

Diversification Opportunities for HOYA and ResMed

0.36

Correlation Coefficient

HOYA  ResMed

Weak diversification

The 3 months correlation between HOYA and ResMed is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding HOYA Corp. and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed Inc and HOYA 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 HOYA Corporation are associated (or correlated) with ResMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ResMed Inc has no effect on the direction of HOYA i.e., HOYA and ResMed go up and down completely randomly.

Pair Corralation between HOYA and ResMed

Assuming the 90 days horizon HOYA is expected to generate 2.92 times less return on investment than ResMed. In addition to that, HOYA is 1.26 times more volatile than ResMed Inc. It trades about 0.05 of its total potential returns per unit of risk. ResMed Inc is currently generating about 0.17 per unit of volatility. If you would invest  19,174  in ResMed Inc on April 23, 2025 and sell it today you would earn a total of  3,056  from holding ResMed Inc or generate 15.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

HOYA Corp.  vs.  ResMed Inc

HOYA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HOYA Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, HOYA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ResMed Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ResMed Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ResMed reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HOYA and ResMed

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

The idea behind HOYA Corporation and ResMed Inc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.