Correlation Between Si Bone and Electromed
Can any of the company-specific risk be diversified away by investing in both Si Bone and Electromed 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 Si Bone and Electromed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Si Bone and Electromed, you can compare the effects of market volatilities on Si Bone and Electromed 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 Si Bone with a short position of Electromed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Si Bone and Electromed.
Diversification Opportunities for Si Bone and Electromed
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SIBN and Electromed is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Si Bone and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed and Si Bone 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 Si Bone are associated (or correlated) with Electromed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromed has no effect on the direction of Si Bone i.e., Si Bone and Electromed go up and down completely randomly.
Pair Corralation between Si Bone and Electromed
Given the investment horizon of 90 days Si Bone is expected to under-perform the Electromed. But the stock apears to be less risky and, when comparing its historical volatility, Si Bone is 1.01 times less risky than Electromed. The stock trades about -0.01 of its potential returns per unit of risk. The Electromed is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,002 in Electromed on November 3, 2024 and sell it today you would earn a total of 2,438 from holding Electromed or generate 243.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Si Bone vs. Electromed
Performance |
| Timeline |
| Si Bone |
| Electromed |
Si Bone and Electromed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Si Bone and Electromed
The main advantage of trading using opposite Si Bone and Electromed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Si Bone position performs unexpectedly, Electromed 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 Electromed will offset losses from the drop in Electromed's long position.The idea behind Si Bone and Electromed 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.| Electromed vs. Neuropace | Electromed vs. Orthopediatrics Corp | Electromed vs. SurModics | Electromed vs. Paragon 28 |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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