Correlation Between Inspire Medical and PROSUS NV

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

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

Diversification Opportunities for Inspire Medical and PROSUS NV

-0.04

Correlation Coefficient

Inspire Medical  PROSUS NV

Good diversification

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

Pair Corralation between Inspire Medical and PROSUS NV

Assuming the 90 days horizon Inspire Medical Systems is expected to generate 0.91 times more return on investment than PROSUS NV. However, Inspire Medical Systems is 1.09 times less risky than PROSUS NV. It trades about 0.3 of its potential returns per unit of risk. PROSUS NV ADR is currently generating about -0.42 per unit of risk. If you would invest  17,795  in Inspire Medical Systems on October 12, 2024 and sell it today you would earn a total of  1,930  from holding Inspire Medical Systems or generate 10.85% return on investment over 90 days.

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

Inspire Medical Systems  vs.  PROSUS NV ADR

Inspire Medical Systems

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inspire Medical Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Inspire Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Inspire Medical and PROSUS NV

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

The idea behind Inspire Medical Systems and PROSUS NV ADR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.