Correlation Between Electromed and Catheter Precision
Can any of the company-specific risk be diversified away by investing in both Electromed and Catheter Precision 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 Catheter Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electromed and Catheter Precision, you can compare the effects of market volatilities on Electromed and Catheter Precision 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 Catheter Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromed and Catheter Precision.
Diversification Opportunities for Electromed and Catheter Precision
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electromed and Catheter is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Catheter Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catheter Precision 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 Catheter Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catheter Precision has no effect on the direction of Electromed i.e., Electromed and Catheter Precision go up and down completely randomly.
Pair Corralation between Electromed and Catheter Precision
Given the investment horizon of 90 days Electromed is expected to generate 0.34 times more return on investment than Catheter Precision. However, Electromed is 2.91 times less risky than Catheter Precision. It trades about 0.08 of its potential returns per unit of risk. Catheter Precision is currently generating about -0.05 per unit of risk. If you would invest 1,196 in Electromed on September 19, 2024 and sell it today you would earn a total of 1,616 from holding Electromed or generate 135.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electromed vs. Catheter Precision
Performance |
| Timeline |
| Electromed |
| Catheter Precision |
Electromed and Catheter Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electromed and Catheter Precision
The main advantage of trading using opposite Electromed and Catheter Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electromed position performs unexpectedly, Catheter Precision 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 Catheter Precision will offset losses from the drop in Catheter Precision's long position.The idea behind Electromed and Catheter Precision 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.| Catheter Precision vs. Avita Medical | Catheter Precision vs. Inogen Inc | Catheter Precision vs. Apyx Medical |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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