Correlation Between Electromed and Agape ATP

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

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

Diversification Opportunities for Electromed and Agape ATP

-0.42

Correlation Coefficient

Electromed  Agape ATP

Very good diversification

The 3 months correlation between Electromed and Agape is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Agape ATP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agape ATP and Electromed 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 Electromed are associated (or correlated) with Agape ATP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agape ATP has no effect on the direction of Electromed i.e., Electromed and Agape ATP go up and down completely randomly.

Pair Corralation between Electromed and Agape ATP

Given the investment horizon of 90 days Electromed is expected to generate 0.18 times more return on investment than Agape ATP. However, Electromed is 5.64 times less risky than Agape ATP. It trades about 0.35 of its potential returns per unit of risk. Agape ATP is currently generating about 0.06 per unit of risk. If you would invest  2,865  in Electromed on October 22, 2024 and sell it today you would earn a total of  535.00  from holding Electromed or generate 18.67% return on investment over 90 days.

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

Electromed  vs.  Agape ATP

Electromed

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electromed are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Electromed exhibited solid returns over the last few months and may actually be approaching a breakup point.

Agape ATP

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agape ATP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Agape ATP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electromed and Agape ATP

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

The idea behind Electromed and Agape ATP 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.