Correlation Between Tactile Systems and Electromed
Can any of the company-specific risk be diversified away by investing in both Tactile Systems 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 Tactile Systems and Electromed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tactile Systems Technology and Electromed, you can compare the effects of market volatilities on Tactile Systems 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 Tactile Systems with a short position of Electromed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tactile Systems and Electromed.
Diversification Opportunities for Tactile Systems and Electromed
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tactile and Electromed is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tactile Systems Technology and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed and Tactile Systems 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 Tactile Systems Technology 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 Tactile Systems i.e., Tactile Systems and Electromed go up and down completely randomly.
Pair Corralation between Tactile Systems and Electromed
Given the investment horizon of 90 days Tactile Systems is expected to generate 1.78 times less return on investment than Electromed. In addition to that, Tactile Systems is 1.04 times more volatile than Electromed. It trades about 0.12 of its total potential returns per unit of risk. Electromed is currently generating about 0.22 per unit of volatility. If you would invest 1,462 in Electromed on August 29, 2024 and sell it today you would earn a total of 1,644 from holding Electromed or generate 112.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tactile Systems Technology vs. Electromed
Performance |
| Timeline |
| Tactile Systems Tech |
| Electromed |
Tactile Systems and Electromed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tactile Systems and Electromed
The main advantage of trading using opposite Tactile Systems and Electromed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tactile Systems 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.| Tactile Systems vs. CONMED | Tactile Systems vs. Treace Medical Concepts | Tactile Systems vs. SurModics | Tactile Systems vs. LivaNova PLC |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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