Correlation Between Health Catalyst and EDAP TMS

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

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

Diversification Opportunities for Health Catalyst and EDAP TMS

-0.59

Correlation Coefficient

Health Catalyst  EDAP TMS

Excellent diversification

The 3 months correlation between Health and EDAP is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Health Catalyst and EDAP TMS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDAP TMS SA and Health Catalyst 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 Health Catalyst are associated (or correlated) with EDAP TMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDAP TMS SA has no effect on the direction of Health Catalyst i.e., Health Catalyst and EDAP TMS go up and down completely randomly.

Pair Corralation between Health Catalyst and EDAP TMS

Given the investment horizon of 90 days Health Catalyst is expected to under-perform the EDAP TMS. In addition to that, Health Catalyst is 1.33 times more volatile than EDAP TMS SA. It trades about -0.19 of its total potential returns per unit of risk. EDAP TMS SA is currently generating about -0.05 per unit of volatility. If you would invest  763.00  in EDAP TMS SA on February 5, 2024 and sell it today you would lose (49.00) from holding EDAP TMS SA or give up 6.42% of portfolio value over 90 days.

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

Health Catalyst  vs.  EDAP TMS SA

Health Catalyst

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Health Catalyst has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic 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.

EDAP TMS SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EDAP TMS SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, EDAP TMS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Health Catalyst and EDAP TMS

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

The idea behind Health Catalyst and EDAP TMS SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.