Correlation Between Motus GI and Electromed

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

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

Diversification Opportunities for Motus GI and Electromed

-0.75

Correlation Coefficient

Motus GI  Electromed

Pay attention - limited upside

The 3 months correlation between Motus and Electromed is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Motus GI Holdings and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed and Motus GI 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 Motus GI Holdings are associated (or correlated) with Electromed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromed has no effect on the direction of Motus GI i.e., Motus GI and Electromed go up and down completely randomly.

Pair Corralation between Motus GI and Electromed

If you would invest  1,966  in Electromed on September 23, 2024 and sell it today you would earn a total of  807.00  from holding Electromed or generate 41.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

Motus GI Holdings  vs.  Electromed

Motus GI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Motus GI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Motus GI is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Electromed

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electromed are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Electromed exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Motus GI and Electromed

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

The idea behind Motus GI Holdings and Electromed 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.