Correlation Between SurModics and Delcath Systems

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

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

Diversification Opportunities for SurModics and Delcath Systems

0.31

Correlation Coefficient

SurModics  Delcath Systems

Weak diversification

The 3 months correlation between SurModics and Delcath is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding SurModics and Delcath Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delcath Systems and SurModics 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 SurModics are associated (or correlated) with Delcath Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delcath Systems has no effect on the direction of SurModics i.e., SurModics and Delcath Systems go up and down completely randomly.

Pair Corralation between SurModics and Delcath Systems

Given the investment horizon of 90 days SurModics is expected to generate 17.76 times less return on investment than Delcath Systems. But when comparing it to its historical volatility, SurModics is 5.99 times less risky than Delcath Systems. It trades about 0.04 of its potential returns per unit of risk. Delcath Systems is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  950.00  in Delcath Systems on September 16, 2024 and sell it today you would earn a total of  261.00  from holding Delcath Systems or generate 27.47% return on investment over 90 days.

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

SurModics  vs.  Delcath Systems

SurModics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SurModics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SurModics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Delcath Systems

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delcath Systems are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Delcath Systems demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SurModics and Delcath Systems

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

The idea behind SurModics and Delcath Systems 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.