Correlation Between EDAP TMS and AngioDynamics

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

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

Diversification Opportunities for EDAP TMS and AngioDynamics

0.47

Correlation Coefficient

EDAP TMS  AngioDynamics

Very weak diversification

The 3 months correlation between EDAP and AngioDynamics is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding EDAP TMS SA and AngioDynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AngioDynamics and EDAP TMS 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 EDAP TMS SA are associated (or correlated) with AngioDynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AngioDynamics has no effect on the direction of EDAP TMS i.e., EDAP TMS and AngioDynamics go up and down completely randomly.

Pair Corralation between EDAP TMS and AngioDynamics

Given the investment horizon of 90 days EDAP TMS SA is expected to under-perform the AngioDynamics. In addition to that, EDAP TMS is 1.14 times more volatile than AngioDynamics. It trades about -0.32 of its total potential returns per unit of risk. AngioDynamics is currently generating about 0.04 per unit of volatility. If you would invest  693.00  in AngioDynamics on August 31, 2024 and sell it today you would earn a total of  9.00  from holding AngioDynamics or generate 1.3% return on investment over 90 days.

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

EDAP TMS SA  vs.  AngioDynamics

EDAP TMS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EDAP TMS SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

AngioDynamics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AngioDynamics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, AngioDynamics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with EDAP TMS and AngioDynamics

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

The idea behind EDAP TMS SA and AngioDynamics 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.