Correlation Between EDAP TMS and Axogen

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

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

Diversification Opportunities for EDAP TMS and Axogen

-0.39

Correlation Coefficient

EDAP TMS  Axogen

Very good diversification

The 3 months correlation between EDAP and Axogen is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding EDAP TMS SA and Axogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axogen Inc and EDAP TMS 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 EDAP TMS SA are associated (or correlated) with Axogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axogen Inc has no effect on the direction of EDAP TMS i.e., EDAP TMS and Axogen go up and down completely randomly.

Pair Corralation between EDAP TMS and Axogen

Given the investment horizon of 90 days EDAP TMS SA is expected to under-perform the Axogen. But the stock apears to be less risky and, when comparing its historical volatility, EDAP TMS SA is 1.01 times less risky than Axogen. The stock trades about -0.05 of its potential returns per unit of risk. The Axogen Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,402  in Axogen Inc on September 29, 2024 and sell it today you would earn a total of  264.00  from holding Axogen Inc or generate 18.83% return on investment over 90 days.

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

EDAP TMS SA  vs.  Axogen Inc

EDAP TMS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EDAP TMS SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Axogen Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Axogen Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Axogen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EDAP TMS and Axogen

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

The idea behind EDAP TMS SA and Axogen 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.

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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.