Correlation Between Nortech Systems and Utah Medical

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

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

Diversification Opportunities for Nortech Systems and Utah Medical

-0.14

Correlation Coefficient

Nortech Systems  Utah Medical

Good diversification

The 3 months correlation between Nortech and Utah is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nortech Systems Incorporated and Utah Medical Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utah Medical Products and Nortech Systems 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 Nortech Systems Incorporated are associated (or correlated) with Utah Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utah Medical Products has no effect on the direction of Nortech Systems i.e., Nortech Systems and Utah Medical go up and down completely randomly.

Pair Corralation between Nortech Systems and Utah Medical

Given the investment horizon of 90 days Nortech Systems Incorporated is expected to under-perform the Utah Medical. In addition to that, Nortech Systems is 2.07 times more volatile than Utah Medical Products. It trades about -0.09 of its total potential returns per unit of risk. Utah Medical Products is currently generating about 0.08 per unit of volatility. If you would invest  5,363  in Utah Medical Products on May 7, 2025 and sell it today you would earn a total of  315.00  from holding Utah Medical Products or generate 5.87% return on investment over 90 days.

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

Nortech Systems Incorporated  vs.  Utah Medical Products

Nortech Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nortech Systems Incorporated 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 basic indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Utah Medical Products

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Utah Medical Products are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Utah Medical may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Nortech Systems and Utah Medical

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

The idea behind Nortech Systems Incorporated and Utah Medical Products 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.