Correlation Between Semler Scientific and Searchlight Solutions

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

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

Diversification Opportunities for Semler Scientific and Searchlight Solutions

0.0

Correlation Coefficient

Semler Scientific  Searchlight Solutions

Pay attention - limited upside

The 3 months correlation between Semler and Searchlight is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Semler Scientific and Searchlight Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Searchlight Solutions and Semler Scientific 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 Semler Scientific are associated (or correlated) with Searchlight Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Searchlight Solutions has no effect on the direction of Semler Scientific i.e., Semler Scientific and Searchlight Solutions go up and down completely randomly.

Pair Corralation between Semler Scientific and Searchlight Solutions

Given the investment horizon of 90 days Semler Scientific is expected to generate 8.21 times less return on investment than Searchlight Solutions. But when comparing it to its historical volatility, Semler Scientific is 14.31 times less risky than Searchlight Solutions. It trades about 0.22 of its potential returns per unit of risk. Searchlight Solutions is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Searchlight Solutions on September 29, 2024 and sell it today you would earn a total of  0.01  from holding Searchlight Solutions or generate 9.223372036854776E16% return on investment over 90 days.

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

Semler Scientific  vs.  Searchlight Solutions

Semler Scientific

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semler Scientific are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Semler Scientific reported solid returns over the last few months and may actually be approaching a breakup point.

Searchlight Solutions

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Searchlight Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent essential indicators, Searchlight Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Semler Scientific and Searchlight Solutions

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

The idea behind Semler Scientific and Searchlight 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.