Correlation Between Electromed and Astrana Health

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

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

Diversification Opportunities for Electromed and Astrana Health

-0.86

Correlation Coefficient

Electromed  Astrana Health

Pay attention - limited upside

The 3 months correlation between Electromed and Astrana is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Electromed and Astrana Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astrana Health 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 Astrana Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astrana Health has no effect on the direction of Electromed i.e., Electromed and Astrana Health go up and down completely randomly.

Pair Corralation between Electromed and Astrana Health

Given the investment horizon of 90 days Electromed is expected to generate 0.77 times more return on investment than Astrana Health. However, Electromed is 1.29 times less risky than Astrana Health. It trades about 0.25 of its potential returns per unit of risk. Astrana Health is currently generating about -0.21 per unit of risk. If you would invest  1,965  in Electromed on September 25, 2024 and sell it today you would earn a total of  993.00  from holding Electromed or generate 50.53% return on investment over 90 days.

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

Electromed  vs.  Astrana Health

Electromed

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electromed are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Electromed exhibited solid returns over the last few months and may actually be approaching a breakup point.

Astrana Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astrana Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Electromed and Astrana Health

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

The idea behind Electromed and Astrana Health 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.