Correlation Between Beyond Air and Electromedical Technologies

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

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

Diversification Opportunities for Beyond Air and Electromedical Technologies

-0.39

Correlation Coefficient

Beyond Air  Electromedical Technologies

Very good diversification

The 3 months correlation between Beyond and Electromedical is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Air and Electromedical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromedical Technologies and Beyond Air 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 Beyond Air 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 Beyond Air i.e., Beyond Air and Electromedical Technologies go up and down completely randomly.

Pair Corralation between Beyond Air and Electromedical Technologies

Given the investment horizon of 90 days Beyond Air is expected to under-perform the Electromedical Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Beyond Air is 2.35 times less risky than Electromedical Technologies. The stock trades about -0.06 of its potential returns per unit of risk. The Electromedical Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.60  in Electromedical Technologies on September 23, 2024 and sell it today you would lose (0.57) from holding Electromedical Technologies or give up 95.0% of portfolio value over 90 days.

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

Beyond Air  vs.  Electromedical Technologies

Beyond Air

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beyond Air are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent forward indicators, Beyond Air reported solid returns over the last few months and may actually be approaching a breakup point.

Electromedical Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Electromedical Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating 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 Beyond Air and Electromedical Technologies

The main advantage of trading using opposite Beyond Air and Electromedical Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beyond Air 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 Beyond Air 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.