Correlation Between Electromed and Ainos

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

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

Diversification Opportunities for Electromed and Ainos

0.32

Correlation Coefficient

Electromed  Ainos

Weak diversification

The 3 months correlation between Electromed and Ainos is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Ainos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ainos Inc 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 Ainos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ainos Inc has no effect on the direction of Electromed i.e., Electromed and Ainos go up and down completely randomly.

Pair Corralation between Electromed and Ainos

Given the investment horizon of 90 days Electromed is expected to under-perform the Ainos. But the stock apears to be less risky and, when comparing its historical volatility, Electromed is 3.75 times less risky than Ainos. The stock trades about -0.03 of its potential returns per unit of risk. The Ainos Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  112.00  in Ainos Inc on March 7, 2024 and sell it today you would lose (30.00) from holding Ainos Inc or give up 26.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Electromed  vs.  Ainos Inc

Electromed

Risk-Adjusted Performance

0 of 100

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 rather sound primary indicators, Electromed is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Ainos Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ainos Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Ainos is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Electromed and Ainos

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

The idea behind Electromed and Ainos Inc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.