Correlation Between Capital Drilling and Inspiration Healthcare
Can any of the company-specific risk be diversified away by investing in both Capital Drilling 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 Capital Drilling and Inspiration Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Drilling and Inspiration Healthcare Group, you can compare the effects of market volatilities on Capital Drilling 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 Capital Drilling with a short position of Inspiration Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Drilling and Inspiration Healthcare.
Diversification Opportunities for Capital Drilling and Inspiration Healthcare
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capital and Inspiration is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Capital Drilling and Inspiration Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspiration Healthcare and Capital Drilling 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 Capital Drilling 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 Capital Drilling i.e., Capital Drilling and Inspiration Healthcare go up and down completely randomly.
Pair Corralation between Capital Drilling and Inspiration Healthcare
Assuming the 90 days trading horizon Capital Drilling is expected to generate 0.52 times more return on investment than Inspiration Healthcare. However, Capital Drilling is 1.93 times less risky than Inspiration Healthcare. It trades about -0.01 of its potential returns per unit of risk. Inspiration Healthcare Group is currently generating about -0.05 per unit of risk. If you would invest 9,356 in Capital Drilling on October 25, 2024 and sell it today you would lose (1,596) from holding Capital Drilling or give up 17.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Drilling vs. Inspiration Healthcare Group
Performance |
| Timeline |
| Capital Drilling |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Inspiration Healthcare |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Capital Drilling and Inspiration Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Drilling and Inspiration Healthcare
The main advantage of trading using opposite Capital Drilling and Inspiration Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Drilling 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.| Capital Drilling vs. Pets at Home | Capital Drilling vs. Cairn Homes PLC | Capital Drilling vs. International Biotechnology Trust | Capital Drilling vs. Gruppo MutuiOnline SpA |
| Inspiration Healthcare vs. Empire Metals Limited | Inspiration Healthcare vs. Cornish Metals | Inspiration Healthcare vs. Livermore Investments Group | Inspiration Healthcare vs. Bisichi Mining PLC |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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