Correlation Between Electromed and Vopia
Can any of the company-specific risk be diversified away by investing in both Electromed and Vopia 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 Electromed and Vopia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electromed and Vopia Inc, you can compare the effects of market volatilities on Electromed and Vopia 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 Electromed with a short position of Vopia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromed and Vopia.
Diversification Opportunities for Electromed and Vopia
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electromed and Vopia is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Vopia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vopia Inc and Electromed 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 Electromed are associated (or correlated) with Vopia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vopia Inc has no effect on the direction of Electromed i.e., Electromed and Vopia go up and down completely randomly.
Pair Corralation between Electromed and Vopia
Given the investment horizon of 90 days Electromed is expected to generate 1.75 times less return on investment than Vopia. But when comparing it to its historical volatility, Electromed is 4.54 times less risky than Vopia. It trades about 0.15 of its potential returns per unit of risk. Vopia Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.04 in Vopia Inc on September 2, 2024 and sell it today you would lose (0.02) from holding Vopia Inc or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electromed vs. Vopia Inc
Performance |
| Timeline |
| Electromed |
| Vopia Inc |
Electromed and Vopia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electromed and Vopia
The main advantage of trading using opposite Electromed and Vopia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electromed position performs unexpectedly, Vopia 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 Vopia will offset losses from the drop in Vopia's long position.| Electromed vs. Profound Medical Corp | Electromed vs. Si Bone | Electromed vs. Nevro Corp | Electromed vs. Orthopediatrics Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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