Correlation Between Surf Air and Revolution Medicines

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

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

Diversification Opportunities for Surf Air and Revolution Medicines

-0.53

Correlation Coefficient

Surf Air  Revolution Medicines

Excellent diversification

The 3 months correlation between Surf and Revolution is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Surf Air Mobility and Revolution Medicines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolution Medicines and Surf Air 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 Surf Air Mobility are associated (or correlated) with Revolution Medicines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolution Medicines has no effect on the direction of Surf Air i.e., Surf Air and Revolution Medicines go up and down completely randomly.

Pair Corralation between Surf Air and Revolution Medicines

Given the investment horizon of 90 days Surf Air Mobility is expected to generate 5.71 times more return on investment than Revolution Medicines. However, Surf Air is 5.71 times more volatile than Revolution Medicines. It trades about 0.11 of its potential returns per unit of risk. Revolution Medicines is currently generating about -0.04 per unit of risk. If you would invest  244.00  in Surf Air Mobility on May 5, 2025 and sell it today you would earn a total of  152.00  from holding Surf Air Mobility or generate 62.3% return on investment over 90 days.

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

Surf Air Mobility  vs.  Revolution Medicines

Surf Air Mobility

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Surf Air Mobility are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Surf Air displayed solid returns over the last few months and may actually be approaching a breakup point.

Revolution Medicines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Revolution Medicines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Revolution Medicines is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Surf Air and Revolution Medicines

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

The idea behind Surf Air Mobility and Revolution Medicines 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.