Correlation Between Rapid Micro and Electromedical Technologies

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

By analyzing existing cross correlation between Rapid Micro Biosystems and Electromedical Technologies, you can compare the effects of market volatilities on Rapid Micro and Electromedical Technologies 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 Rapid Micro with a short position of Electromedical Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rapid Micro and Electromedical Technologies.

Diversification Opportunities for Rapid Micro and Electromedical Technologies

-0.31

Correlation Coefficient

Rapid Micro  Electromedical Technologies

Very good diversification

The 3 months correlation between Rapid and Electromedical is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Rapid Micro Biosystems and Electromedical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromedical Technologies and Rapid Micro 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 Rapid Micro Biosystems are associated (or correlated) with Electromedical Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromedical Technologies has no effect on the direction of Rapid Micro i.e., Rapid Micro and Electromedical Technologies go up and down completely randomly.

Pair Corralation between Rapid Micro and Electromedical Technologies

Given the investment horizon of 90 days Rapid Micro Biosystems is expected to generate 0.24 times more return on investment than Electromedical Technologies. However, Rapid Micro Biosystems is 4.14 times less risky than Electromedical Technologies. It trades about 0.13 of its potential returns per unit of risk. Electromedical Technologies is currently generating about 0.03 per unit of risk. If you would invest  69.00  in Rapid Micro Biosystems on October 20, 2024 and sell it today you would earn a total of  54.00  from holding Rapid Micro Biosystems or generate 78.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Rapid Micro Biosystems  vs.  Electromedical Technologies

Rapid Micro Biosystems

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rapid Micro Biosystems are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Rapid Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

Electromedical Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Electromedical Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Electromedical Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rapid Micro and Electromedical Technologies

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

The idea behind Rapid Micro Biosystems and Electromedical Technologies 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.