Correlation Between Electromed and Life On

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

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

Diversification Opportunities for Electromed and Life On

-0.67

Correlation Coefficient

Electromed  Life On

Excellent diversification

The 3 months correlation between Electromed and Life is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Life On Earth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life On Earth 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 Life On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life On Earth has no effect on the direction of Electromed i.e., Electromed and Life On go up and down completely randomly.

Pair Corralation between Electromed and Life On

If you would invest  1,725  in Electromed on September 3, 2024 and sell it today you would earn a total of  1,353  from holding Electromed or generate 78.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Electromed  vs.  Life On Earth

Electromed

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Electromed are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Electromed exhibited solid returns over the last few months and may actually be approaching a breakup point.

Life On Earth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life On Earth has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Life On is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Electromed and Life On

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

The idea behind Electromed and Life On Earth 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.