Correlation Between EDAP TMS and Phreesia

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

Diversification Opportunities for EDAP TMS and Phreesia

-0.65

Correlation Coefficient

EDAP TMS  Phreesia

Excellent diversification

The 3 months correlation between EDAP and Phreesia is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding EDAP TMS SA and Phreesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phreesia 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 Phreesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phreesia has no effect on the direction of EDAP TMS i.e., EDAP TMS and Phreesia go up and down completely randomly.

Pair Corralation between EDAP TMS and Phreesia

Given the investment horizon of 90 days EDAP TMS SA is expected to under-perform the Phreesia. But the stock apears to be less risky and, when comparing its historical volatility, EDAP TMS SA is 1.01 times less risky than Phreesia. The stock trades about -0.06 of its potential returns per unit of risk. The Phreesia is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,439  in Phreesia on October 10, 2024 and sell it today you would lose (741.00) from holding Phreesia or give up 21.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

EDAP TMS SA  vs.  Phreesia

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 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.

Phreesia

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Phreesia are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Phreesia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EDAP TMS and Phreesia

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

The idea behind EDAP TMS SA and Phreesia 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.