Correlation Between Electromed and InfuSystems Holdings

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

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

Diversification Opportunities for Electromed and InfuSystems Holdings

-0.3

Correlation Coefficient

Electromed  InfuSystems Holdings

Very good diversification

The 3 months correlation between Electromed and InfuSystems is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and InfuSystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfuSystems Holdings 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 InfuSystems Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfuSystems Holdings has no effect on the direction of Electromed i.e., Electromed and InfuSystems Holdings go up and down completely randomly.

Pair Corralation between Electromed and InfuSystems Holdings

Given the investment horizon of 90 days Electromed is expected to generate 0.97 times more return on investment than InfuSystems Holdings. However, Electromed is 1.03 times less risky than InfuSystems Holdings. It trades about 0.06 of its potential returns per unit of risk. InfuSystems Holdings is currently generating about -0.18 per unit of risk. If you would invest  1,499  in Electromed on February 20, 2024 and sell it today you would earn a total of  139.00  from holding Electromed or generate 9.27% return on investment over 90 days.

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

Electromed  vs.  InfuSystems Holdings

Electromed

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electromed are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Electromed may actually be approaching a critical reversion point that can send shares even higher in June 2024.

InfuSystems Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InfuSystems Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Electromed and InfuSystems Holdings

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

The idea behind Electromed and InfuSystems Holdings 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.