Correlation Between EDAP TMS and Cencora
Can any of the company-specific risk be diversified away by investing in both EDAP TMS and Cencora 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 EDAP TMS and Cencora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EDAP TMS SA and Cencora, you can compare the effects of market volatilities on EDAP TMS and Cencora 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 EDAP TMS with a short position of Cencora. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDAP TMS and Cencora.
Diversification Opportunities for EDAP TMS and Cencora
Very good diversification
The 3 months correlation between EDAP and Cencora is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding EDAP TMS SA and Cencora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cencora and EDAP TMS 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 EDAP TMS SA are associated (or correlated) with Cencora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cencora has no effect on the direction of EDAP TMS i.e., EDAP TMS and Cencora go up and down completely randomly.
Pair Corralation between EDAP TMS and Cencora
Given the investment horizon of 90 days EDAP TMS SA is expected to generate 3.75 times more return on investment than Cencora. However, EDAP TMS is 3.75 times more volatile than Cencora. It trades about 0.07 of its potential returns per unit of risk. Cencora is currently generating about -0.33 per unit of risk. If you would invest 236.00 in EDAP TMS SA on September 18, 2024 and sell it today you would earn a total of 10.00 from holding EDAP TMS SA or generate 4.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EDAP TMS SA vs. Cencora
Performance |
| Timeline |
| EDAP TMS SA |
| Cencora |
EDAP TMS and Cencora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EDAP TMS and Cencora
The main advantage of trading using opposite EDAP TMS and Cencora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDAP TMS position performs unexpectedly, Cencora 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 Cencora will offset losses from the drop in Cencora's long position.The idea behind EDAP TMS SA and Cencora 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.| Cencora vs. Yuexiu Transport Infrastructure | Cencora vs. Anheuser Busch Inbev | Cencora vs. TFI International | Cencora vs. Keurig Dr Pepper |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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