Correlation Between DexCom and ProSomnus Common

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

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

Diversification Opportunities for DexCom and ProSomnus Common

-0.21

Correlation Coefficient

DexCom  ProSomnus Common

Very good diversification

The 3 months correlation between DexCom and ProSomnus is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding DexCom Inc and ProSomnus Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProSomnus Common Stock and DexCom 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 DexCom Inc are associated (or correlated) with ProSomnus Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProSomnus Common Stock has no effect on the direction of DexCom i.e., DexCom and ProSomnus Common go up and down completely randomly.

Pair Corralation between DexCom and ProSomnus Common

Given the investment horizon of 90 days DexCom Inc is expected to generate 0.11 times more return on investment than ProSomnus Common. However, DexCom Inc is 8.85 times less risky than ProSomnus Common. It trades about -0.12 of its potential returns per unit of risk. ProSomnus Common Stock is currently generating about -0.17 per unit of risk. If you would invest  13,994  in DexCom Inc on February 8, 2024 and sell it today you would lose (984.00) from holding DexCom Inc or give up 7.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

DexCom Inc  vs.  ProSomnus Common Stock

DexCom Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, DexCom is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

ProSomnus Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProSomnus Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with DexCom and ProSomnus Common

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

The idea behind DexCom Inc and ProSomnus Common Stock 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.