Correlation Between Electrocore LLC and Chemed Corp

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

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

Diversification Opportunities for Electrocore LLC and Chemed Corp

-0.39

Correlation Coefficient

Electrocore LLC  Chemed Corp

Very good diversification

The 3 months correlation between Electrocore and Chemed is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Electrocore LLC and Chemed Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemed Corp and Electrocore LLC 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 Electrocore LLC are associated (or correlated) with Chemed Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemed Corp has no effect on the direction of Electrocore LLC i.e., Electrocore LLC and Chemed Corp go up and down completely randomly.

Pair Corralation between Electrocore LLC and Chemed Corp

Given the investment horizon of 90 days Electrocore LLC is expected to under-perform the Chemed Corp. In addition to that, Electrocore LLC is 2.04 times more volatile than Chemed Corp. It trades about -0.09 of its total potential returns per unit of risk. Chemed Corp is currently generating about 0.18 per unit of volatility. If you would invest  56,149  in Chemed Corp on December 2, 2024 and sell it today you would earn a total of  3,931  from holding Chemed Corp or generate 7.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Electrocore LLC  vs.  Chemed Corp

Electrocore LLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Electrocore LLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Electrocore LLC reported solid returns over the last few months and may actually be approaching a breakup point.

Chemed Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chemed Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Chemed Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Electrocore LLC and Chemed Corp

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

The idea behind Electrocore LLC and Chemed Corp 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 CEOs Directory module to screen CEOs from public companies around the world.