Correlation Between Outset MedicalInc and Escalon Medical

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Can any of the company-specific risk be diversified away by investing in both Outset MedicalInc and Escalon 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 Outset MedicalInc and Escalon Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Outset MedicalInc and Escalon Medical Corp, you can compare the effects of market volatilities on Outset MedicalInc and Escalon 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 Outset MedicalInc with a short position of Escalon Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Outset MedicalInc and Escalon Medical.

Diversification Opportunities for Outset MedicalInc and Escalon Medical

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Outset and Escalon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Outset MedicalInc and Escalon Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Escalon Medical Corp and Outset MedicalInc 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 Outset MedicalInc are associated (or correlated) with Escalon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Escalon Medical Corp has no effect on the direction of Outset MedicalInc i.e., Outset MedicalInc and Escalon Medical go up and down completely randomly.

Pair Corralation between Outset MedicalInc and Escalon Medical

If you would invest  208.00  in Outset MedicalInc on February 1, 2024 and sell it today you would earn a total of  45.00  from holding Outset MedicalInc or generate 21.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy4.35%
ValuesDaily Returns

Outset MedicalInc  vs.  Escalon Medical Corp

 Performance 
       Timeline  
Outset MedicalInc 

Risk-Adjusted Performance

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Over the last 90 days Outset MedicalInc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Outset MedicalInc is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.
Escalon Medical Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Escalon Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Escalon Medical is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Outset MedicalInc and Escalon Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Outset MedicalInc and Escalon Medical

The main advantage of trading using opposite Outset MedicalInc and Escalon Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outset MedicalInc position performs unexpectedly, Escalon 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 Escalon Medical will offset losses from the drop in Escalon Medical's long position.
The idea behind Outset MedicalInc and Escalon Medical Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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