Correlation Between Inspiration Healthcare and Synthomer Plc
Can any of the company-specific risk be diversified away by investing in both Inspiration Healthcare and Synthomer Plc 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 Synthomer Plc 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 Synthomer plc, you can compare the effects of market volatilities on Inspiration Healthcare and Synthomer Plc 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 Synthomer Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspiration Healthcare and Synthomer Plc.
Diversification Opportunities for Inspiration Healthcare and Synthomer Plc
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Inspiration and Synthomer is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Inspiration Healthcare Group and Synthomer plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthomer plc 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 Synthomer Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synthomer plc has no effect on the direction of Inspiration Healthcare i.e., Inspiration Healthcare and Synthomer Plc go up and down completely randomly.
Pair Corralation between Inspiration Healthcare and Synthomer Plc
Assuming the 90 days trading horizon Inspiration Healthcare Group is expected to generate 0.15 times more return on investment than Synthomer Plc. However, Inspiration Healthcare Group is 6.66 times less risky than Synthomer Plc. It trades about 0.22 of its potential returns per unit of risk. Synthomer plc is currently generating about 0.0 per unit of risk. If you would invest 1,250 in Inspiration Healthcare Group on November 3, 2024 and sell it today you would earn a total of 35.00 from holding Inspiration Healthcare Group or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inspiration Healthcare Group vs. Synthomer plc
Performance |
| Timeline |
| Inspiration Healthcare |
| Synthomer plc |
Inspiration Healthcare and Synthomer Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inspiration Healthcare and Synthomer Plc
The main advantage of trading using opposite Inspiration Healthcare and Synthomer Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inspiration Healthcare position performs unexpectedly, Synthomer Plc 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 Synthomer Plc will offset losses from the drop in Synthomer Plc's long position.| Inspiration Healthcare vs. Tyson Foods Cl | Inspiration Healthcare vs. National Beverage Corp | Inspiration Healthcare vs. Ebro Foods | Inspiration Healthcare vs. Impax Environmental Markets |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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