Correlation Between Mednax and EDAP TMS

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

By analyzing existing cross correlation between Mednax Inc and EDAP TMS SA, you can compare the effects of market volatilities on Mednax and EDAP TMS 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 Mednax with a short position of EDAP TMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mednax and EDAP TMS.

Diversification Opportunities for Mednax and EDAP TMS

0.36

Correlation Coefficient

Mednax  EDAP TMS

Weak diversification

The 3 months correlation between Mednax and EDAP is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mednax Inc and EDAP TMS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDAP TMS SA and Mednax 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 Mednax Inc are associated (or correlated) with EDAP TMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDAP TMS SA has no effect on the direction of Mednax i.e., Mednax and EDAP TMS go up and down completely randomly.

Pair Corralation between Mednax and EDAP TMS

Allowing for the 90-day total investment horizon Mednax is expected to generate 2.02 times less return on investment than EDAP TMS. In addition to that, Mednax is 1.66 times more volatile than EDAP TMS SA. It trades about 0.06 of its total potential returns per unit of risk. EDAP TMS SA is currently generating about 0.19 per unit of volatility. If you would invest  229.00  in EDAP TMS SA on November 29, 2024 and sell it today you would earn a total of  30.00  from holding EDAP TMS SA or generate 13.1% return on investment over 90 days.

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

Mednax Inc  vs.  EDAP TMS SA

Mednax Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mednax Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Mednax is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

EDAP TMS SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EDAP TMS SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, EDAP TMS may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Mednax and EDAP TMS

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

The idea behind Mednax Inc and EDAP TMS SA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.