Correlation Between Modular Medical and Energy Recovery

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

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

Diversification Opportunities for Modular Medical and Energy Recovery

0.09

Correlation Coefficient

Modular Medical  Energy Recovery

Significant diversification

The 3 months correlation between Modular and Energy is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Modular Medical and Energy Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Recovery and Modular Medical 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 Modular Medical are associated (or correlated) with Energy Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Recovery has no effect on the direction of Modular Medical i.e., Modular Medical and Energy Recovery go up and down completely randomly.

Pair Corralation between Modular Medical and Energy Recovery

Given the investment horizon of 90 days Modular Medical is expected to under-perform the Energy Recovery. In addition to that, Modular Medical is 2.04 times more volatile than Energy Recovery. It trades about -0.11 of its total potential returns per unit of risk. Energy Recovery is currently generating about 0.09 per unit of volatility. If you would invest  1,225  in Energy Recovery on May 8, 2025 and sell it today you would earn a total of  138.00  from holding Energy Recovery or generate 11.27% return on investment over 90 days.

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

Modular Medical  vs.  Energy Recovery

Modular Medical

Risk-Adjusted Performance

Weakest

Over the last 90 days Modular Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Energy Recovery

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Recovery are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Energy Recovery may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Modular Medical and Energy Recovery

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

The idea behind Modular Medical and Energy Recovery 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.