Correlation Between Electreon Wireless and Imed Infinity

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

By analyzing existing cross correlation between Electreon Wireless and Imed Infinity Medical Limited, you can compare the effects of market volatilities on Electreon Wireless and Imed Infinity 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 Electreon Wireless with a short position of Imed Infinity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electreon Wireless and Imed Infinity.

Diversification Opportunities for Electreon Wireless and Imed Infinity

0.22

Correlation Coefficient

Electreon Wireless  Imed Infinity

Modest diversification

The 3 months correlation between Electreon and Imed is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Electreon Wireless and Imed Infinity Medical Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imed Infinity Medical and Electreon Wireless 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 Electreon Wireless are associated (or correlated) with Imed Infinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imed Infinity Medical has no effect on the direction of Electreon Wireless i.e., Electreon Wireless and Imed Infinity go up and down completely randomly.

Pair Corralation between Electreon Wireless and Imed Infinity

Assuming the 90 days trading horizon Electreon Wireless is expected to generate 10.78 times less return on investment than Imed Infinity. In addition to that, Electreon Wireless is 1.56 times more volatile than Imed Infinity Medical Limited. It trades about 0.01 of its total potential returns per unit of risk. Imed Infinity Medical Limited is currently generating about 0.1 per unit of volatility. If you would invest  10,860  in Imed Infinity Medical Limited on October 22, 2024 and sell it today you would earn a total of  1,240  from holding Imed Infinity Medical Limited or generate 11.42% return on investment over 90 days.

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

Electreon Wireless  vs.  Imed Infinity Medical Limited

Electreon Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

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

Imed Infinity Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Imed Infinity Medical Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Imed Infinity sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electreon Wireless and Imed Infinity

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

The idea behind Electreon Wireless and Imed Infinity Medical Limited 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.