Correlation Between Electromed and Encision

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

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

Diversification Opportunities for Electromed and Encision

0.03

Correlation Coefficient

Electromed  Encision

Significant diversification

The 3 months correlation between Electromed and Encision is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Encision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encision and Electromed 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 Electromed are associated (or correlated) with Encision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encision has no effect on the direction of Electromed i.e., Electromed and Encision go up and down completely randomly.

Pair Corralation between Electromed and Encision

If you would invest  46.00  in Encision on January 20, 2024 and sell it today you would earn a total of  0.00  from holding Encision or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Electromed  vs.  Encision

Electromed

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Electromed are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Electromed exhibited solid returns over the last few months and may actually be approaching a breakup point.

Encision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Encision has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Encision is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Electromed and Encision

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

The idea behind Electromed and Encision 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.