Correlation Between Associated British and Inspiration Healthcare
Can any of the company-specific risk be diversified away by investing in both Associated British 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 Associated British and Inspiration Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Inspiration Healthcare Group, you can compare the effects of market volatilities on Associated British 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 Associated British with a short position of Inspiration Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Inspiration Healthcare.
Diversification Opportunities for Associated British and Inspiration Healthcare
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Associated and Inspiration is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Inspiration Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspiration Healthcare and Associated British 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 Associated British Foods 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 Associated British i.e., Associated British and Inspiration Healthcare go up and down completely randomly.
Pair Corralation between Associated British and Inspiration Healthcare
Assuming the 90 days trading horizon Associated British Foods is expected to generate 0.56 times more return on investment than Inspiration Healthcare. However, Associated British Foods is 1.78 times less risky than Inspiration Healthcare. It trades about -0.1 of its potential returns per unit of risk. Inspiration Healthcare Group is currently generating about -0.22 per unit of risk. If you would invest 232,600 in Associated British Foods on September 13, 2024 and sell it today you would lose (13,400) from holding Associated British Foods or give up 5.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Inspiration Healthcare Group
Performance |
| Timeline |
| Associated British Foods |
| Inspiration Healthcare |
Associated British and Inspiration Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Inspiration Healthcare
The main advantage of trading using opposite Associated British and Inspiration Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British 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.| Associated British vs. Ebro Foods | Associated British vs. Premier Foods PLC | Associated British vs. Cairo Communication SpA | Associated British vs. Gruppo MutuiOnline SpA |
| Inspiration Healthcare vs. Quadrise Plc | Inspiration Healthcare vs. ImmuPharma PLC | Inspiration Healthcare vs. Intuitive Investments Group | Inspiration Healthcare vs. European Metals Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |