Correlation Between Electromed and ENDRA Life

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

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

Diversification Opportunities for Electromed and ENDRA Life

-0.68

Correlation Coefficient

Electromed  ENDRA Life

Excellent diversification

The 3 months correlation between Electromed and ENDRA is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and ENDRA Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENDRA Life Sciences 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 ENDRA Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENDRA Life Sciences has no effect on the direction of Electromed i.e., Electromed and ENDRA Life go up and down completely randomly.

Pair Corralation between Electromed and ENDRA Life

Given the investment horizon of 90 days Electromed is expected to generate 0.21 times more return on investment than ENDRA Life. However, Electromed is 4.82 times less risky than ENDRA Life. It trades about 0.34 of its potential returns per unit of risk. ENDRA Life Sciences is currently generating about -0.03 per unit of risk. If you would invest  1,725  in Electromed on August 31, 2024 and sell it today you would earn a total of  1,381  from holding Electromed or generate 80.06% return on investment over 90 days.

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

Electromed  vs.  ENDRA Life Sciences

Electromed

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Electromed are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, Electromed exhibited solid returns over the last few months and may actually be approaching a breakup point.

ENDRA Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENDRA Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Electromed and ENDRA Life

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

The idea behind Electromed and ENDRA Life Sciences 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.