Correlation Between Modular Medical and Penumbra

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

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

Diversification Opportunities for Modular Medical and Penumbra

0.92

Correlation Coefficient

Modular Medical  Penumbra

Almost no diversification

The 3 months correlation between Modular and Penumbra is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Modular Medical and Penumbra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penumbra and Modular 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 Modular Medical are associated (or correlated) with Penumbra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penumbra has no effect on the direction of Modular Medical i.e., Modular Medical and Penumbra go up and down completely randomly.

Pair Corralation between Modular Medical and Penumbra

Given the investment horizon of 90 days Modular Medical is expected to generate 2.78 times more return on investment than Penumbra. However, Modular Medical is 2.78 times more volatile than Penumbra. It trades about -0.05 of its potential returns per unit of risk. Penumbra is currently generating about -0.14 per unit of risk. If you would invest  85.00  in Modular Medical on April 21, 2025 and sell it today you would lose (16.00) from holding Modular Medical or give up 18.82% of portfolio value over 90 days.

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

Modular Medical  vs.  Penumbra

Modular Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Modular Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Penumbra

Risk-Adjusted Performance

Very Weak

Over the last 90 days Penumbra has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Modular Medical and Penumbra

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

The idea behind Modular Medical and Penumbra 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.