Correlation Between Electromed and OPTIMIZERx Corp

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

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

Diversification Opportunities for Electromed and OPTIMIZERx Corp

0.28

Correlation Coefficient

Electromed  OPTIMIZERx Corp

Modest diversification

The 3 months correlation between Electromed and OPTIMIZERx is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and OPTIMIZERx Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPTIMIZERx 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 OPTIMIZERx Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPTIMIZERx Corp has no effect on the direction of Electromed i.e., Electromed and OPTIMIZERx Corp go up and down completely randomly.

Pair Corralation between Electromed and OPTIMIZERx Corp

Given the investment horizon of 90 days Electromed is expected to under-perform the OPTIMIZERx Corp. But the stock apears to be less risky and, when comparing its historical volatility, Electromed is 1.3 times less risky than OPTIMIZERx Corp. The stock trades about -0.04 of its potential returns per unit of risk. The OPTIMIZERx Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  552.00  in OPTIMIZERx Corp on December 1, 2024 and sell it today you would lose (38.00) from holding OPTIMIZERx Corp or give up 6.88% of portfolio value over 90 days.

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

Electromed  vs.  OPTIMIZERx Corp

Electromed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electromed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

OPTIMIZERx Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days OPTIMIZERx Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, OPTIMIZERx Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Electromed and OPTIMIZERx Corp

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

The idea behind Electromed and OPTIMIZERx 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 Commodity Directory module to find actively traded commodities issued by global exchanges.