Correlation Between Sight Sciences and Electromed

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

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

Diversification Opportunities for Sight Sciences and Electromed

-0.42

Correlation Coefficient

Sight Sciences  Electromed

Very good diversification

The 3 months correlation between Sight and Electromed is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sight Sciences and Electromed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromed and Sight Sciences 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 Sight Sciences 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 Sight Sciences i.e., Sight Sciences and Electromed go up and down completely randomly.

Pair Corralation between Sight Sciences and Electromed

Given the investment horizon of 90 days Sight Sciences is expected to generate 2.42 times less return on investment than Electromed. In addition to that, Sight Sciences is 2.11 times more volatile than Electromed. It trades about 0.01 of its total potential returns per unit of risk. Electromed is currently generating about 0.07 per unit of volatility. If you would invest  1,044  in Electromed on July 29, 2024 and sell it today you would earn a total of  1,280  from holding Electromed or generate 122.61% return on investment over 90 days.

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

Sight Sciences  vs.  Electromed

Sight Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sight Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in November 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Electromed

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Electromed are ranked lower than 17 (%) 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.

Pair Trading with Sight Sciences and Electromed

The main advantage of trading using opposite Sight Sciences and Electromed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sight Sciences 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 Sight Sciences 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.