Correlation Between TransMedics and InMode

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

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

Diversification Opportunities for TransMedics and InMode

-0.34

Correlation Coefficient

TransMedics  InMode

Very good diversification

The 3 months correlation between TransMedics and InMode is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding TransMedics Group and InMode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InMode and TransMedics 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 TransMedics Group are associated (or correlated) with InMode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InMode has no effect on the direction of TransMedics i.e., TransMedics and InMode go up and down completely randomly.

Pair Corralation between TransMedics and InMode

Given the investment horizon of 90 days TransMedics Group is expected to under-perform the InMode. In addition to that, TransMedics is 1.01 times more volatile than InMode. It trades about -0.31 of its total potential returns per unit of risk. InMode is currently generating about 0.1 per unit of volatility. If you would invest  1,665  in InMode on July 26, 2024 and sell it today you would earn a total of  105.00  from holding InMode or generate 6.31% return on investment over 90 days.

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

TransMedics Group  vs.  InMode

TransMedics Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TransMedics Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

InMode

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with TransMedics and InMode

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

The idea behind TransMedics Group and InMode 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.