Correlation Between 4Dmedical and EROAD

Can any of the company-specific risk be diversified away by investing in both 4Dmedical and EROAD 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 4Dmedical and EROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 4Dmedical and EROAD, you can compare the effects of market volatilities on 4Dmedical and EROAD 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 4Dmedical with a short position of EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4Dmedical and EROAD.

Diversification Opportunities for 4Dmedical and EROAD

0.1

Correlation Coefficient

4Dmedical  EROAD

Average diversification

The 3 months correlation between 4Dmedical and EROAD is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding 4Dmedical and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD and 4Dmedical 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 4Dmedical are associated (or correlated) with EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of 4Dmedical i.e., 4Dmedical and EROAD go up and down completely randomly.

Pair Corralation between 4Dmedical and EROAD

Assuming the 90 days trading horizon 4Dmedical is expected to under-perform the EROAD. But the stock apears to be less risky and, when comparing its historical volatility, 4Dmedical is 1.43 times less risky than EROAD. The stock trades about -0.11 of its potential returns per unit of risk. The EROAD is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  85.00  in EROAD on October 9, 2024 and sell it today you would earn a total of  15.00  from holding EROAD or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

4Dmedical  vs.  EROAD

4Dmedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 4Dmedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

EROAD

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EROAD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, EROAD may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with 4Dmedical and EROAD

The main advantage of trading using opposite 4Dmedical and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4Dmedical position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD's long position.

The idea behind 4Dmedical and EROAD 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.