Correlation Between Biotricity and Electromed
Can any of the company-specific risk be diversified away by investing in both Biotricity 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 Biotricity and Electromed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biotricity and Electromed, you can compare the effects of market volatilities on Biotricity 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 Biotricity with a short position of Electromed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biotricity and Electromed.
Diversification Opportunities for Biotricity and Electromed
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Biotricity and Electromed is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Biotricity and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed and Biotricity 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 Biotricity 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 Biotricity i.e., Biotricity and Electromed go up and down completely randomly.
Pair Corralation between Biotricity and Electromed
Given the investment horizon of 90 days Biotricity is expected to generate 3.86 times more return on investment than Electromed. However, Biotricity is 3.86 times more volatile than Electromed. It trades about -0.07 of its potential returns per unit of risk. Electromed is currently generating about -0.49 per unit of risk. If you would invest 154.00 in Biotricity on January 16, 2024 and sell it today you would lose (20.00) from holding Biotricity or give up 12.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biotricity vs. Electromed
Performance |
| Timeline |
| Biotricity |
| Electromed |
Biotricity and Electromed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biotricity and Electromed
The main advantage of trading using opposite Biotricity and Electromed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biotricity 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.| Biotricity vs. The Ensign Group | Biotricity vs. Select Medical Holdings | Biotricity vs. Encompass Health Corp | Biotricity vs. Enhabit |
| Electromed vs. The Ensign Group | Electromed vs. Select Medical Holdings | Electromed vs. Encompass Health Corp | Electromed vs. Enhabit |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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