Correlation Between Electromed and Clearpoint Neuro

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

By analyzing existing cross correlation between Electromed and Clearpoint Neuro, you can compare the effects of market volatilities on Electromed and Clearpoint Neuro 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 Clearpoint Neuro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromed and Clearpoint Neuro.

Diversification Opportunities for Electromed and Clearpoint Neuro

0.27

Correlation Coefficient

Electromed  Clearpoint Neuro

Modest diversification

The 3 months correlation between Electromed and Clearpoint is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Clearpoint Neuro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearpoint Neuro 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 Clearpoint Neuro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearpoint Neuro has no effect on the direction of Electromed i.e., Electromed and Clearpoint Neuro go up and down completely randomly.

Pair Corralation between Electromed and Clearpoint Neuro

Given the investment horizon of 90 days Electromed is expected to generate 1.08 times less return on investment than Clearpoint Neuro. But when comparing it to its historical volatility, Electromed is 1.62 times less risky than Clearpoint Neuro. It trades about 0.21 of its potential returns per unit of risk. Clearpoint Neuro is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,166  in Clearpoint Neuro on September 18, 2024 and sell it today you would earn a total of  452.00  from holding Clearpoint Neuro or generate 38.77% return on investment over 90 days.

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

Electromed  vs.  Clearpoint Neuro

Electromed

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electromed are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting primary indicators, Electromed exhibited solid returns over the last few months and may actually be approaching a breakup point.

Clearpoint Neuro

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clearpoint Neuro are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Clearpoint Neuro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electromed and Clearpoint Neuro

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

The idea behind Electromed and Clearpoint Neuro 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.