Correlation Between Connect Biopharma and EDAP TMS

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

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

Diversification Opportunities for Connect Biopharma and EDAP TMS

-0.22

Correlation Coefficient

Connect Biopharma  EDAP TMS

Very good diversification

The 3 months correlation between Connect and EDAP is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Connect Biopharma Holdings and EDAP TMS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDAP TMS SA and Connect Biopharma 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 Connect Biopharma Holdings are associated (or correlated) with EDAP TMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDAP TMS SA has no effect on the direction of Connect Biopharma i.e., Connect Biopharma and EDAP TMS go up and down completely randomly.

Pair Corralation between Connect Biopharma and EDAP TMS

Given the investment horizon of 90 days Connect Biopharma is expected to generate 1.76 times less return on investment than EDAP TMS. But when comparing it to its historical volatility, Connect Biopharma Holdings is 1.11 times less risky than EDAP TMS. It trades about 0.07 of its potential returns per unit of risk. EDAP TMS SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  148.00  in EDAP TMS SA on August 19, 2025 and sell it today you would earn a total of  62.00  from holding EDAP TMS SA or generate 41.89% return on investment over 90 days.

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

Connect Biopharma Holdings  vs.  EDAP TMS SA

Connect Biopharma

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Connect Biopharma Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Connect Biopharma sustained solid returns over the last few months and may actually be approaching a breakup point.

EDAP TMS SA

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in EDAP TMS SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, EDAP TMS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Connect Biopharma and EDAP TMS

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

The idea behind Connect Biopharma Holdings and EDAP TMS SA 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.