Correlation Between Electromed and PAVmed

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

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

Diversification Opportunities for Electromed and PAVmed

-0.5

Correlation Coefficient

Electromed  PAVmed

Very good diversification

The 3 months correlation between Electromed and PAVmed is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and PAVmed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAVmed Inc 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 PAVmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAVmed Inc has no effect on the direction of Electromed i.e., Electromed and PAVmed go up and down completely randomly.

Pair Corralation between Electromed and PAVmed

Given the investment horizon of 90 days Electromed is expected to under-perform the PAVmed. But the stock apears to be less risky and, when comparing its historical volatility, Electromed is 1.67 times less risky than PAVmed. The stock trades about -0.11 of its potential returns per unit of risk. The PAVmed Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  64.00  in PAVmed Inc on December 30, 2024 and sell it today you would earn a total of  11.00  from holding PAVmed Inc or generate 17.19% return on investment over 90 days.

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

Electromed  vs.  PAVmed Inc

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 unsteady performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

PAVmed Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PAVmed Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, PAVmed displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electromed and PAVmed

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

The idea behind Electromed and PAVmed Inc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.