Correlation Between Electrocore LLC and Medirom Healthcare
Can any of the company-specific risk be diversified away by investing in both Electrocore LLC and Medirom Healthcare 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 Electrocore LLC and Medirom Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electrocore LLC and Medirom Healthcare Technologies, you can compare the effects of market volatilities on Electrocore LLC and Medirom Healthcare 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 Electrocore LLC with a short position of Medirom Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrocore LLC and Medirom Healthcare.
Diversification Opportunities for Electrocore LLC and Medirom Healthcare
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Electrocore and Medirom is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Electrocore LLC and Medirom Healthcare Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medirom Healthcare and Electrocore LLC 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 Electrocore LLC are associated (or correlated) with Medirom Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medirom Healthcare has no effect on the direction of Electrocore LLC i.e., Electrocore LLC and Medirom Healthcare go up and down completely randomly.
Pair Corralation between Electrocore LLC and Medirom Healthcare
Given the investment horizon of 90 days Electrocore LLC is expected to generate 0.72 times more return on investment than Medirom Healthcare. However, Electrocore LLC is 1.4 times less risky than Medirom Healthcare. It trades about 0.13 of its potential returns per unit of risk. Medirom Healthcare Technologies is currently generating about -0.15 per unit of risk. If you would invest 1,105 in Electrocore LLC on October 26, 2024 and sell it today you would earn a total of 479.00 from holding Electrocore LLC or generate 43.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electrocore LLC vs. Medirom Healthcare Technologie
Performance |
| Timeline |
| Electrocore LLC |
| Medirom Healthcare |
Electrocore LLC and Medirom Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electrocore LLC and Medirom Healthcare
The main advantage of trading using opposite Electrocore LLC and Medirom Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electrocore LLC position performs unexpectedly, Medirom Healthcare 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 Medirom Healthcare will offset losses from the drop in Medirom Healthcare's long position.| Electrocore LLC vs. STRATA Skin Sciences | Electrocore LLC vs. Sight Sciences | Electrocore LLC vs. Neuropace | Electrocore LLC vs. IRIDEX |
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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.
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