Correlation Between Inspire Medical and DSV AS

Can any of the company-specific risk be diversified away by investing in both Inspire Medical and DSV AS 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 DSV AS 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 DSV AS, you can compare the effects of market volatilities on Inspire Medical and DSV AS 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 DSV AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspire Medical and DSV AS.

Diversification Opportunities for Inspire Medical and DSV AS

0.12

Correlation Coefficient

Inspire Medical  DSV AS

Average diversification

The 3 months correlation between Inspire and DSV is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and DSV AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV AS 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 DSV AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV AS has no effect on the direction of Inspire Medical i.e., Inspire Medical and DSV AS go up and down completely randomly.

Pair Corralation between Inspire Medical and DSV AS

Assuming the 90 days horizon Inspire Medical Systems is expected to generate 2.34 times more return on investment than DSV AS. However, Inspire Medical is 2.34 times more volatile than DSV AS. It trades about 0.34 of its potential returns per unit of risk. DSV AS is currently generating about 0.05 per unit of risk. If you would invest  17,450  in Inspire Medical Systems on October 11, 2024 and sell it today you would earn a total of  2,275  from holding Inspire Medical Systems or generate 13.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Inspire Medical Systems  vs.  DSV AS

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.

DSV AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSV AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DSV AS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Inspire Medical and DSV AS

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

The idea behind Inspire Medical Systems and DSV AS 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.