Correlation Between Rxsight and Electromed

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

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

Diversification Opportunities for Rxsight and Electromed

0.78

Correlation Coefficient

Rxsight  Electromed

Poor diversification

The 3 months correlation between Rxsight and Electromed is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Rxsight and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed and Rxsight 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 Rxsight are associated (or correlated) with Electromed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromed has no effect on the direction of Rxsight i.e., Rxsight and Electromed go up and down completely randomly.

Pair Corralation between Rxsight and Electromed

Given the investment horizon of 90 days Rxsight is expected to generate 0.82 times more return on investment than Electromed. However, Rxsight is 1.22 times less risky than Electromed. It trades about -0.13 of its potential returns per unit of risk. Electromed is currently generating about -0.11 per unit of risk. If you would invest  3,381  in Rxsight on December 30, 2024 and sell it today you would lose (725.00) from holding Rxsight or give up 21.44% of portfolio value over 90 days.

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

Rxsight  vs.  Electromed

Rxsight

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rxsight has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating 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.

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.

Pair Trading with Rxsight and Electromed

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

The idea behind Rxsight and Electromed 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.