Correlation Between Definitive Healthcare and Outset Medical

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

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

Diversification Opportunities for Definitive Healthcare and Outset Medical

0.35

Correlation Coefficient

Definitive Healthcare  Outset Medical

Weak diversification

The 3 months correlation between Definitive and Outset is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Definitive Healthcare Corp and Outset Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outset Medical and Definitive Healthcare 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 Definitive Healthcare Corp are associated (or correlated) with Outset Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outset Medical has no effect on the direction of Definitive Healthcare i.e., Definitive Healthcare and Outset Medical go up and down completely randomly.

Pair Corralation between Definitive Healthcare and Outset Medical

Allowing for the 90-day total investment horizon Definitive Healthcare is expected to generate 2.34 times less return on investment than Outset Medical. But when comparing it to its historical volatility, Definitive Healthcare Corp is 1.18 times less risky than Outset Medical. It trades about 0.2 of its potential returns per unit of risk. Outset Medical is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  998.00  in Outset Medical on February 20, 2025 and sell it today you would earn a total of  953.00  from holding Outset Medical or generate 95.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Definitive Healthcare Corp  vs.  Outset Medical

Definitive Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Definitive Healthcare Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in June 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Outset Medical

Risk-Adjusted Performance

OK

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

Pair Trading with Definitive Healthcare and Outset Medical

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

The idea behind Definitive Healthcare Corp and Outset Medical 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.