Correlation Between Summit Materials and Inspiration Healthcare

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Can any of the company-specific risk be diversified away by investing in both Summit Materials and Inspiration Healthcare 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 Summit Materials and Inspiration Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials Cl and Inspiration Healthcare Group, you can compare the effects of market volatilities on Summit Materials and Inspiration Healthcare 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 Summit Materials with a short position of Inspiration Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Inspiration Healthcare.

Diversification Opportunities for Summit Materials and Inspiration Healthcare

SummitInspirationDiversified AwaySummitInspirationDiversified Away100%
-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Summit and Inspiration is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Inspiration Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspiration Healthcare and Summit Materials 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 Summit Materials Cl are associated (or correlated) with Inspiration Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspiration Healthcare has no effect on the direction of Summit Materials i.e., Summit Materials and Inspiration Healthcare go up and down completely randomly.

Pair Corralation between Summit Materials and Inspiration Healthcare

Assuming the 90 days trading horizon Summit Materials is expected to generate 149.44 times less return on investment than Inspiration Healthcare. But when comparing it to its historical volatility, Summit Materials Cl is 300.32 times less risky than Inspiration Healthcare. It trades about 0.33 of its potential returns per unit of risk. Inspiration Healthcare Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,285  in Inspiration Healthcare Group on November 25, 2024 and sell it today you would earn a total of  665.00  from holding Inspiration Healthcare Group or generate 51.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy45.45%
ValuesDaily Returns

Summit Materials Cl  vs.  Inspiration Healthcare Group

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-15-10-50510
JavaScript chart by amCharts 3.21.150LAI IHC
       Timeline  
Summit Materials 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Over the last 90 days Summit Materials Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Summit Materials is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Inspiration Healthcare 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Inspiration Healthcare Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Inspiration Healthcare exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb121416182022242628

Summit Materials and Inspiration Healthcare Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.21-3.15-2.1-1.040.01.122.233.354.47 0.050.100.150.20
JavaScript chart by amCharts 3.21.150LAI IHC
       Returns  

Pair Trading with Summit Materials and Inspiration Healthcare

The main advantage of trading using opposite Summit Materials and Inspiration Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Inspiration Healthcare 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 Inspiration Healthcare will offset losses from the drop in Inspiration Healthcare's long position.
The idea behind Summit Materials Cl and Inspiration Healthcare Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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