Correlation Between EDAP TMS and CareCloud

Can any of the company-specific risk be diversified away by investing in both EDAP TMS and CareCloud 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 CareCloud 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 CareCloud, you can compare the effects of market volatilities on EDAP TMS and CareCloud 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 CareCloud. Check out your portfolio center. Please also check ongoing floating volatility patterns of EDAP TMS and CareCloud.

Diversification Opportunities for EDAP TMS and CareCloud

0.26

Correlation Coefficient

EDAP TMS  CareCloud

Modest diversification

The 3 months correlation between EDAP and CareCloud is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding EDAP TMS SA and CareCloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareCloud 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 CareCloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareCloud has no effect on the direction of EDAP TMS i.e., EDAP TMS and CareCloud go up and down completely randomly.

Pair Corralation between EDAP TMS and CareCloud

Given the investment horizon of 90 days EDAP TMS SA is expected to generate 0.52 times more return on investment than CareCloud. However, EDAP TMS SA is 1.94 times less risky than CareCloud. It trades about 0.01 of its potential returns per unit of risk. CareCloud is currently generating about -0.17 per unit of risk. If you would invest  222.00  in EDAP TMS SA on December 22, 2024 and sell it today you would lose (3.00) from holding EDAP TMS SA or give up 1.35% of portfolio value over 90 days.

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

EDAP TMS SA  vs.  CareCloud

EDAP TMS SA

Risk-Adjusted Performance

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 relatively invariable basic indicators, EDAP TMS is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

CareCloud

Risk-Adjusted Performance

Very Weak

Over the last 90 days CareCloud has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with EDAP TMS and CareCloud

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

The idea behind EDAP TMS SA and CareCloud 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.