Correlation Between Electromed and DarioHealth Corp

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

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

Diversification Opportunities for Electromed and DarioHealth Corp

-0.88

Correlation Coefficient

Electromed  DarioHealth Corp

Pay attention - limited upside

The 3 months correlation between Electromed and DarioHealth is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and DarioHealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DarioHealth Corp 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 DarioHealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DarioHealth Corp has no effect on the direction of Electromed i.e., Electromed and DarioHealth Corp go up and down completely randomly.

Pair Corralation between Electromed and DarioHealth Corp

Given the investment horizon of 90 days Electromed is expected to under-perform the DarioHealth Corp. But the stock apears to be less risky and, when comparing its historical volatility, Electromed is 2.69 times less risky than DarioHealth Corp. The stock trades about -0.01 of its potential returns per unit of risk. The DarioHealth Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  83.00  in DarioHealth Corp on September 22, 2024 and sell it today you would lose (3.00) from holding DarioHealth Corp or give up 3.61% of portfolio value over 90 days.

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

Electromed  vs.  DarioHealth Corp

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 unsteady primary indicators, Electromed exhibited solid returns over the last few months and may actually be approaching a breakup point.

DarioHealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DarioHealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, DarioHealth Corp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Electromed and DarioHealth Corp

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

The idea behind Electromed and DarioHealth Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.