Correlation Between SurModics and LivaNova PLC

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

By analyzing existing cross correlation between SurModics and LivaNova PLC, you can compare the effects of market volatilities on SurModics and LivaNova PLC 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 LivaNova PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SurModics and LivaNova PLC.

Diversification Opportunities for SurModics and LivaNova PLC

-0.41

Correlation Coefficient

SurModics  LivaNova PLC

Very good diversification

The 3 months correlation between SurModics and LivaNova is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding SurModics and LivaNova PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LivaNova PLC 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 LivaNova PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LivaNova PLC has no effect on the direction of SurModics i.e., SurModics and LivaNova PLC go up and down completely randomly.

Pair Corralation between SurModics and LivaNova PLC

Given the investment horizon of 90 days SurModics is expected to generate 0.38 times more return on investment than LivaNova PLC. However, SurModics is 2.61 times less risky than LivaNova PLC. It trades about 0.05 of its potential returns per unit of risk. LivaNova PLC is currently generating about 0.02 per unit of risk. If you would invest  3,926  in SurModics on September 17, 2024 and sell it today you would earn a total of  77.00  from holding SurModics or generate 1.96% return on investment over 90 days.

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

SurModics  vs.  LivaNova PLC

SurModics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SurModics are ranked lower than 4 (%) 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.

LivaNova PLC

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LivaNova PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, LivaNova PLC is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SurModics and LivaNova PLC

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

The idea behind SurModics and LivaNova PLC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.