Correlation Between STRATA Skin and Electromed
Can any of the company-specific risk be diversified away by investing in both STRATA Skin 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 STRATA Skin and Electromed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STRATA Skin Sciences and Electromed, you can compare the effects of market volatilities on STRATA Skin 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 STRATA Skin with a short position of Electromed. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRATA Skin and Electromed.
Diversification Opportunities for STRATA Skin and Electromed
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between STRATA and Electromed is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding STRATA Skin Sciences and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed and STRATA Skin 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 STRATA Skin Sciences 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 STRATA Skin i.e., STRATA Skin and Electromed go up and down completely randomly.
Pair Corralation between STRATA Skin and Electromed
Given the investment horizon of 90 days STRATA Skin is expected to generate 29.25 times less return on investment than Electromed. In addition to that, STRATA Skin is 1.3 times more volatile than Electromed. It trades about 0.01 of its total potential returns per unit of risk. Electromed is currently generating about 0.34 per unit of volatility. If you would invest 1,725 in Electromed on September 2, 2024 and sell it today you would earn a total of 1,353 from holding Electromed or generate 78.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STRATA Skin Sciences vs. Electromed
Performance |
| Timeline |
| STRATA Skin Sciences |
| Electromed |
STRATA Skin and Electromed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STRATA Skin and Electromed
The main advantage of trading using opposite STRATA Skin and Electromed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STRATA Skin 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.| STRATA Skin vs. Axogen Inc | STRATA Skin vs. Ainos Inc | STRATA Skin vs. LENSAR Inc | STRATA Skin vs. Nexalin Technology |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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