Correlation Between PROSUS NV and Inspire Medical

Can any of the company-specific risk be diversified away by investing in both PROSUS NV and Inspire Medical 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 PROSUS NV and Inspire Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PROSUS NV ADR and Inspire Medical Systems, you can compare the effects of market volatilities on PROSUS NV and Inspire Medical 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 PROSUS NV with a short position of Inspire Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSUS NV and Inspire Medical.

Diversification Opportunities for PROSUS NV and Inspire Medical

-0.04

Correlation Coefficient

PROSUS NV  Inspire Medical

Good diversification

The 3 months correlation between PROSUS and Inspire is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding PROSUS NV ADR and Inspire Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspire Medical Systems and PROSUS NV 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 PROSUS NV ADR are associated (or correlated) with Inspire Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspire Medical Systems has no effect on the direction of PROSUS NV i.e., PROSUS NV and Inspire Medical go up and down completely randomly.

Pair Corralation between PROSUS NV and Inspire Medical

Assuming the 90 days horizon PROSUS NV ADR is expected to generate 1.67 times more return on investment than Inspire Medical. However, PROSUS NV is 1.67 times more volatile than Inspire Medical Systems. It trades about 0.02 of its potential returns per unit of risk. Inspire Medical Systems is currently generating about 0.01 per unit of risk. If you would invest  680.00  in PROSUS NV ADR on October 11, 2024 and sell it today you would lose (5.00) from holding PROSUS NV ADR or give up 0.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PROSUS NV ADR  vs.  Inspire Medical Systems

PROSUS NV ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROSUS NV ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Inspire Medical Systems

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inspire Medical Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Inspire Medical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PROSUS NV and Inspire Medical

The main advantage of trading using opposite PROSUS NV and Inspire Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSUS NV position performs unexpectedly, Inspire Medical 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 Inspire Medical will offset losses from the drop in Inspire Medical's long position.

The idea behind PROSUS NV ADR and Inspire Medical Systems 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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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.