Correlation Between ICU Medical and BioLife Solutions

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

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

Diversification Opportunities for ICU Medical and BioLife Solutions

0.47

Correlation Coefficient

ICU Medical  BioLife Solutions

Very weak diversification

The 3 months correlation between ICU and BioLife is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and BioLife Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioLife Solutions 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 BioLife Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioLife Solutions has no effect on the direction of ICU Medical i.e., ICU Medical and BioLife Solutions go up and down completely randomly.

Pair Corralation between ICU Medical and BioLife Solutions

Given the investment horizon of 90 days ICU Medical is expected to under-perform the BioLife Solutions. But the stock apears to be less risky and, when comparing its historical volatility, ICU Medical is 1.76 times less risky than BioLife Solutions. The stock trades about -0.14 of its potential returns per unit of risk. The BioLife Solutions is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,294  in BioLife Solutions on March 19, 2025 and sell it today you would lose (120.00) from holding BioLife Solutions or give up 5.23% of portfolio value over 90 days.

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

ICU Medical  vs.  BioLife Solutions

ICU Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICU Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

BioLife Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days BioLife Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ICU Medical and BioLife Solutions

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

The idea behind ICU Medical and BioLife Solutions 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.