Correlation Between Inspire Medical and AAC TECHNOLOGHLDGADR
Can any of the company-specific risk be diversified away by investing in both Inspire Medical and AAC TECHNOLOGHLDGADR 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 Inspire Medical and AAC TECHNOLOGHLDGADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inspire Medical Systems and AAC TECHNOLOGHLDGADR, you can compare the effects of market volatilities on Inspire Medical and AAC TECHNOLOGHLDGADR 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 Inspire Medical with a short position of AAC TECHNOLOGHLDGADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire Medical and AAC TECHNOLOGHLDGADR.
Diversification Opportunities for Inspire Medical and AAC TECHNOLOGHLDGADR
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Inspire and AAC is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR and Inspire 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 Inspire Medical Systems are associated (or correlated) with AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of Inspire Medical i.e., Inspire Medical and AAC TECHNOLOGHLDGADR go up and down completely randomly.
Pair Corralation between Inspire Medical and AAC TECHNOLOGHLDGADR
Assuming the 90 days horizon Inspire Medical Systems is expected to generate 0.54 times more return on investment than AAC TECHNOLOGHLDGADR. However, Inspire Medical Systems is 1.84 times less risky than AAC TECHNOLOGHLDGADR. It trades about 0.38 of its potential returns per unit of risk. AAC TECHNOLOGHLDGADR is currently generating about 0.02 per unit of risk. If you would invest 18,035 in Inspire Medical Systems on October 13, 2024 and sell it today you would earn a total of 2,295 from holding Inspire Medical Systems or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inspire Medical Systems vs. AAC TECHNOLOGHLDGADR
Performance |
| Timeline |
| Inspire Medical Systems |
| AAC TECHNOLOGHLDGADR |
Inspire Medical and AAC TECHNOLOGHLDGADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspire Medical and AAC TECHNOLOGHLDGADR
The main advantage of trading using opposite Inspire Medical and AAC TECHNOLOGHLDGADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspire Medical position performs unexpectedly, AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR will offset losses from the drop in AAC TECHNOLOGHLDGADR's long position.| Inspire Medical vs. Japan Post Insurance | Inspire Medical vs. Direct Line Insurance | Inspire Medical vs. Reinsurance Group of | Inspire Medical vs. HANOVER INSURANCE |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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