Correlation Between Bioelectronics Corp and RA Medical

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

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

Diversification Opportunities for Bioelectronics Corp and RA Medical

0.1

Correlation Coefficient

Bioelectronics Corp  RA Medical

Average diversification

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

Pair Corralation between Bioelectronics Corp and RA Medical

If you would invest  0.03  in Bioelectronics Corp on October 12, 2024 and sell it today you would lose (0.01) from holding Bioelectronics Corp or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Bioelectronics Corp  vs.  RA Medical Systems

Bioelectronics Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bioelectronics Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Bioelectronics Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

RA Medical Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RA Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, RA Medical is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bioelectronics Corp and RA Medical

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

The idea behind Bioelectronics Corp and RA Medical Systems 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.