Correlation Between Electromed and Venus Concept

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

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

Diversification Opportunities for Electromed and Venus Concept

0.1

Correlation Coefficient

Electromed  Venus Concept

Average diversification

The 3 months correlation between Electromed and Venus is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Venus Concept in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Venus Concept 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 Venus Concept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Venus Concept has no effect on the direction of Electromed i.e., Electromed and Venus Concept go up and down completely randomly.

Pair Corralation between Electromed and Venus Concept

Given the investment horizon of 90 days Electromed is expected to under-perform the Venus Concept. But the stock apears to be less risky and, when comparing its historical volatility, Electromed is 3.43 times less risky than Venus Concept. The stock trades about -0.04 of its potential returns per unit of risk. The Venus Concept is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Venus Concept on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Venus Concept or generate 0.0% return on investment over 90 days.

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

Electromed  vs.  Venus Concept

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.

Venus Concept

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Venus Concept are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Venus Concept displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electromed and Venus Concept

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

The idea behind Electromed and Venus Concept 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .