Correlation Between Profound Medical and EDAP TMS
Can any of the company-specific risk be diversified away by investing in both Profound Medical and EDAP TMS 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 Profound Medical and EDAP TMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profound Medical Corp and EDAP TMS SA, you can compare the effects of market volatilities on Profound Medical and EDAP TMS 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 Profound Medical with a short position of EDAP TMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profound Medical and EDAP TMS.
Diversification Opportunities for Profound Medical and EDAP TMS
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Profound and EDAP is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and EDAP TMS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDAP TMS SA and Profound Medical 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 Profound Medical Corp are associated (or correlated) with EDAP TMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDAP TMS SA has no effect on the direction of Profound Medical i.e., Profound Medical and EDAP TMS go up and down completely randomly.
Pair Corralation between Profound Medical and EDAP TMS
Given the investment horizon of 90 days Profound Medical Corp is expected to generate 1.01 times more return on investment than EDAP TMS. However, Profound Medical is 1.01 times more volatile than EDAP TMS SA. It trades about 0.0 of its potential returns per unit of risk. EDAP TMS SA is currently generating about -0.07 per unit of risk. If you would invest 1,009 in Profound Medical Corp on September 3, 2024 and sell it today you would lose (168.00) from holding Profound Medical Corp or give up 16.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Profound Medical Corp vs. EDAP TMS SA
Performance |
| Timeline |
| Profound Medical Corp |
| EDAP TMS SA |
Profound Medical and EDAP TMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profound Medical and EDAP TMS
The main advantage of trading using opposite Profound Medical and EDAP TMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profound Medical position performs unexpectedly, EDAP TMS 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 EDAP TMS will offset losses from the drop in EDAP TMS's long position.| Profound Medical vs. Si Bone | Profound Medical vs. Sight Sciences | Profound Medical vs. Nevro Corp | Profound Medical vs. Paragon 28 |
| EDAP TMS vs. Patterson Companies | EDAP TMS vs. Henry Schein | EDAP TMS vs. McKesson | EDAP TMS vs. Cardinal Health |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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