Correlation Between Electromed and Sharps Technology

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

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

Diversification Opportunities for Electromed and Sharps Technology

0.4

Correlation Coefficient

Electromed  Sharps Technology

Very weak diversification

The 3 months correlation between Electromed and Sharps is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Sharps Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharps Technology 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 Sharps Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharps Technology has no effect on the direction of Electromed i.e., Electromed and Sharps Technology go up and down completely randomly.

Pair Corralation between Electromed and Sharps Technology

Given the investment horizon of 90 days Electromed is expected to generate 0.18 times more return on investment than Sharps Technology. However, Electromed is 5.42 times less risky than Sharps Technology. It trades about -0.11 of its potential returns per unit of risk. Sharps Technology is currently generating about -0.21 per unit of risk. If you would invest  3,016  in Electromed on December 30, 2024 and sell it today you would lose (682.00) from holding Electromed or give up 22.61% of portfolio value over 90 days.

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

Electromed  vs.  Sharps Technology

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.

Sharps Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sharps Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Electromed and Sharps Technology

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

The idea behind Electromed and Sharps Technology 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.