Correlation Between Electromedical Technologies and Cerus
Can any of the company-specific risk be diversified away by investing in both Electromedical Technologies and Cerus 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 Electromedical Technologies and Cerus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electromedical Technologies and Cerus, you can compare the effects of market volatilities on Electromedical Technologies and Cerus 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 Electromedical Technologies with a short position of Cerus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromedical Technologies and Cerus.
Diversification Opportunities for Electromedical Technologies and Cerus
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Electromedical and Cerus is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Electromedical Technologies and Cerus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerus and Electromedical Technologies 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 Electromedical Technologies are associated (or correlated) with Cerus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerus has no effect on the direction of Electromedical Technologies i.e., Electromedical Technologies and Cerus go up and down completely randomly.
Pair Corralation between Electromedical Technologies and Cerus
Given the investment horizon of 90 days Electromedical Technologies is expected to generate 3.2 times more return on investment than Cerus. However, Electromedical Technologies is 3.2 times more volatile than Cerus. It trades about 0.04 of its potential returns per unit of risk. Cerus is currently generating about -0.01 per unit of risk. If you would invest 0.10 in Electromedical Technologies on September 20, 2024 and sell it today you would lose (0.07) from holding Electromedical Technologies or give up 70.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electromedical Technologies vs. Cerus
Performance |
| Timeline |
| Electromedical Technologies |
| Cerus |
Electromedical Technologies and Cerus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electromedical Technologies and Cerus
The main advantage of trading using opposite Electromedical Technologies and Cerus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electromedical Technologies position performs unexpectedly, Cerus 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 Cerus will offset losses from the drop in Cerus' long position.| Electromedical Technologies vs. Abbott Laboratories | Electromedical Technologies vs. Stryker | Electromedical Technologies vs. Boston Scientific Corp | Electromedical Technologies vs. Medtronic PLC |
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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