Correlation Between EDAP TMS and Cutera

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

Diversification Opportunities for EDAP TMS and Cutera

0.45

Correlation Coefficient

EDAP TMS  Cutera

Very weak diversification

The 3 months correlation between EDAP and Cutera is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding EDAP TMS SA and Cutera Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cutera Inc 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 Cutera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cutera Inc has no effect on the direction of EDAP TMS i.e., EDAP TMS and Cutera go up and down completely randomly.

Pair Corralation between EDAP TMS and Cutera

Given the investment horizon of 90 days EDAP TMS SA is expected to generate 0.28 times more return on investment than Cutera. However, EDAP TMS SA is 3.62 times less risky than Cutera. It trades about 0.03 of its potential returns per unit of risk. Cutera Inc is currently generating about -0.1 per unit of risk. If you would invest  218.00  in EDAP TMS SA on December 28, 2024 and sell it today you would earn a total of  4.00  from holding EDAP TMS SA or generate 1.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	83.33%
Values	Daily Returns

EDAP TMS SA  vs.  Cutera Inc

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.

Cutera Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cutera Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with EDAP TMS and Cutera

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

The idea behind EDAP TMS SA and Cutera Inc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.