Correlation Between Novocure and ResMed

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

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

Diversification Opportunities for Novocure and ResMed

-0.86

Correlation Coefficient

Novocure  ResMed

Pay attention - limited upside

The 3 months correlation between Novocure and ResMed is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Novocure and ResMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ResMed Inc and Novocure 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 Novocure are associated (or correlated) with ResMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ResMed Inc has no effect on the direction of Novocure i.e., Novocure and ResMed go up and down completely randomly.

Pair Corralation between Novocure and ResMed

Given the investment horizon of 90 days Novocure is expected to under-perform the ResMed. In addition to that, Novocure is 4.39 times more volatile than ResMed Inc. It trades about -0.11 of its total potential returns per unit of risk. ResMed Inc is currently generating about 0.28 per unit of volatility. If you would invest  24,143  in ResMed Inc on May 6, 2025 and sell it today you would earn a total of  4,702  from holding ResMed Inc or generate 19.48% return on investment over 90 days.

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

Novocure  vs.  ResMed Inc

Novocure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Novocure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

ResMed Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ResMed Inc are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, ResMed exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novocure and ResMed

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

The idea behind Novocure and ResMed Inc 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 Global Correlations module to find global opportunities by holding instruments from different markets.