Correlation Between Inspiration Healthcare and Alstria Office
Can any of the company-specific risk be diversified away by investing in both Inspiration Healthcare and Alstria Office 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 Inspiration Healthcare and Alstria Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inspiration Healthcare Group and alstria office REIT AG, you can compare the effects of market volatilities on Inspiration Healthcare and Alstria Office 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 Inspiration Healthcare with a short position of Alstria Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspiration Healthcare and Alstria Office.
Diversification Opportunities for Inspiration Healthcare and Alstria Office
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Inspiration and Alstria is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Inspiration Healthcare Group and alstria office REIT AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on alstria office REIT and Inspiration Healthcare 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 Inspiration Healthcare Group are associated (or correlated) with Alstria Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of alstria office REIT has no effect on the direction of Inspiration Healthcare i.e., Inspiration Healthcare and Alstria Office go up and down completely randomly.
Pair Corralation between Inspiration Healthcare and Alstria Office
Assuming the 90 days trading horizon Inspiration Healthcare Group is expected to under-perform the Alstria Office. But the stock apears to be less risky and, when comparing its historical volatility, Inspiration Healthcare Group is 1.61 times less risky than Alstria Office. The stock trades about -0.07 of its potential returns per unit of risk. The alstria office REIT AG is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 341.00 in alstria office REIT AG on September 29, 2024 and sell it today you would earn a total of 424.00 from holding alstria office REIT AG or generate 124.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inspiration Healthcare Group vs. alstria office REIT AG
Performance |
| Timeline |
| Inspiration Healthcare |
| alstria office REIT |
Inspiration Healthcare and Alstria Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspiration Healthcare and Alstria Office
The main advantage of trading using opposite Inspiration Healthcare and Alstria Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspiration Healthcare position performs unexpectedly, Alstria Office 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 Alstria Office will offset losses from the drop in Alstria Office's long position.The idea behind Inspiration Healthcare Group and alstria office REIT AG 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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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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