Correlation Between Electromed and PAVmed Series

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

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

Diversification Opportunities for Electromed and PAVmed Series

-0.24

Correlation Coefficient

Electromed  PAVmed Series

Very good diversification

The 3 months correlation between Electromed and PAVmed is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and PAVmed Series Z in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAVmed Series Z 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 Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAVmed Series Z has no effect on the direction of Electromed i.e., Electromed and PAVmed Series go up and down completely randomly.

Pair Corralation between Electromed and PAVmed Series

Given the investment horizon of 90 days Electromed is expected to generate 0.13 times more return on investment than PAVmed Series. However, Electromed is 7.61 times less risky than PAVmed Series. It trades about 0.03 of its potential returns per unit of risk. PAVmed Series Z is currently generating about -0.13 per unit of risk. If you would invest  2,808  in Electromed on September 18, 2024 and sell it today you would earn a total of  34.00  from holding Electromed or generate 1.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.0%
Values	Daily Returns

Electromed  vs.  PAVmed Series Z

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

PAVmed Series Z

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PAVmed Series Z are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, PAVmed Series showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electromed and PAVmed Series

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

The idea behind Electromed and PAVmed Series Z 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 Global Correlations module to find global opportunities by holding instruments from different markets.