Correlation Between Repro Med and Pro Dex

Can any of the company-specific risk be diversified away by investing in both Repro Med and Pro Dex 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 Repro Med and Pro Dex into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Repro Med Systems and Pro Dex, you can compare the effects of market volatilities on Repro Med and Pro Dex 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 Repro Med with a short position of Pro Dex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Repro Med and Pro Dex.

Diversification Opportunities for Repro Med and Pro Dex

0.85

Correlation Coefficient

Repro Med  Pro Dex

Very poor diversification

The 3 months correlation between Repro and Pro is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Repro Med Systems and Pro Dex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Dex and Repro Med 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 Repro Med Systems are associated (or correlated) with Pro Dex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Dex has no effect on the direction of Repro Med i.e., Repro Med and Pro Dex go up and down completely randomly.

Pair Corralation between Repro Med and Pro Dex

Given the investment horizon of 90 days Repro Med is expected to generate 2.46 times less return on investment than Pro Dex. But when comparing it to its historical volatility, Repro Med Systems is 1.45 times less risky than Pro Dex. It trades about 0.26 of its potential returns per unit of risk. Pro Dex is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  2,810  in Pro Dex on August 16, 2024 and sell it today you would earn a total of  1,886  from holding Pro Dex or generate 67.12% return on investment over 90 days.

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

Repro Med Systems  vs.  Pro Dex

Repro Med Systems

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Repro Med Systems are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Repro Med exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pro Dex

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Dex are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Pro Dex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Repro Med and Pro Dex

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

The idea behind Repro Med Systems and Pro Dex 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.