Correlation Between Icecure Medical and Cardinal Health

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

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

Diversification Opportunities for Icecure Medical and Cardinal Health

-0.32

Correlation Coefficient

Icecure Medical  Cardinal Health

Very good diversification

The 3 months correlation between Icecure and Cardinal is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Icecure Medical and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health and Icecure 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 Icecure Medical are associated (or correlated) with Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Icecure Medical i.e., Icecure Medical and Cardinal Health go up and down completely randomly.

Pair Corralation between Icecure Medical and Cardinal Health

Given the investment horizon of 90 days Icecure Medical is expected to generate 1.5 times more return on investment than Cardinal Health. However, Icecure Medical is 1.5 times more volatile than Cardinal Health. It trades about -0.1 of its potential returns per unit of risk. Cardinal Health is currently generating about -0.32 per unit of risk. If you would invest  125.00  in Icecure Medical on February 3, 2024 and sell it today you would lose (7.00) from holding Icecure Medical or give up 5.6% of portfolio value over 90 days.

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

Icecure Medical  vs.  Cardinal Health

Icecure Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icecure Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Cardinal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardinal Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Cardinal Health is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Icecure Medical and Cardinal Health

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

The idea behind Icecure Medical and Cardinal Health 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.