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

0.15

Correlation Coefficient

EDAP TMS  CareCloud

Average diversification

The 3 months correlation between EDAP and CareCloud is 0.15. 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 is expected to generate 3.11 times less return on investment than CareCloud. But when comparing it to its historical volatility, EDAP TMS SA is 1.82 times less risky than CareCloud. It trades about 0.03 of its potential returns per unit of risk. CareCloud is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,841  in CareCloud on December 29, 2024 and sell it today you would earn a total of  102.00  from holding CareCloud or generate 5.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

EDAP TMS SA  vs.  CareCloud

EDAP TMS SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EDAP TMS SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, EDAP TMS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CareCloud

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CareCloud are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, CareCloud reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Check out your portfolio center.

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 Stocks Directory module to find actively traded stocks across global markets.