Correlation Between ICU Medical and Haemonetics

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

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

Diversification Opportunities for ICU Medical and Haemonetics

-0.28

Correlation Coefficient

ICU Medical  Haemonetics

Very good diversification

The 3 months correlation between ICU and Haemonetics is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and Haemonetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haemonetics and ICU 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 ICU Medical are associated (or correlated) with Haemonetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haemonetics has no effect on the direction of ICU Medical i.e., ICU Medical and Haemonetics go up and down completely randomly.

Pair Corralation between ICU Medical and Haemonetics

Given the investment horizon of 90 days ICU Medical is expected to under-perform the Haemonetics. In addition to that, ICU Medical is 1.15 times more volatile than Haemonetics. It trades about -0.01 of its total potential returns per unit of risk. Haemonetics is currently generating about 0.32 per unit of volatility. If you would invest  8,489  in Haemonetics on February 4, 2024 and sell it today you would earn a total of  951.00  from holding Haemonetics or generate 11.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ICU Medical  vs.  Haemonetics

ICU Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ICU Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, ICU Medical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Haemonetics

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Haemonetics are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Haemonetics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ICU Medical and Haemonetics

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

The idea behind ICU Medical and Haemonetics 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.