Correlation Between INTUITIVE SURGICAL and China Overseas

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

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

Diversification Opportunities for INTUITIVE SURGICAL and China Overseas

-0.39

Correlation Coefficient

INTUITIVE SURGICAL  China Overseas

Very good diversification

The 3 months correlation between INTUITIVE and China is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding INTUITIVE SURGICAL and China Overseas Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Overseas Land and INTUITIVE SURGICAL 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 INTUITIVE SURGICAL are associated (or correlated) with China Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Overseas Land has no effect on the direction of INTUITIVE SURGICAL i.e., INTUITIVE SURGICAL and China Overseas go up and down completely randomly.

Pair Corralation between INTUITIVE SURGICAL and China Overseas

Assuming the 90 days trading horizon INTUITIVE SURGICAL is expected to generate 0.71 times more return on investment than China Overseas. However, INTUITIVE SURGICAL is 1.4 times less risky than China Overseas. It trades about 0.05 of its potential returns per unit of risk. China Overseas Land is currently generating about -0.02 per unit of risk. If you would invest  42,620  in INTUITIVE SURGICAL on April 24, 2025 and sell it today you would earn a total of  1,780  from holding INTUITIVE SURGICAL or generate 4.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

INTUITIVE SURGICAL  vs.  China Overseas Land

INTUITIVE SURGICAL

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTUITIVE SURGICAL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, INTUITIVE SURGICAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

China Overseas Land

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Overseas Land has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, China Overseas is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INTUITIVE SURGICAL and China Overseas

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

The idea behind INTUITIVE SURGICAL and China Overseas Land 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.