Correlation Between Inspire Medical and Polyplex Public

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

Diversification Opportunities for Inspire Medical and Polyplex Public

0.2

Correlation Coefficient

Inspire Medical  Polyplex Public

Modest diversification

The 3 months correlation between Inspire and Polyplex is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Inspire Medical Systems and Polyplex Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polyplex Public 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 Polyplex Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polyplex Public has no effect on the direction of Inspire Medical i.e., Inspire Medical and Polyplex Public go up and down completely randomly.

Pair Corralation between Inspire Medical and Polyplex Public

Assuming the 90 days horizon Inspire Medical Systems is expected to under-perform the Polyplex Public. But the stock apears to be less risky and, when comparing its historical volatility, Inspire Medical Systems is 5.94 times less risky than Polyplex Public. The stock trades about 0.0 of its potential returns per unit of risk. The Polyplex Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Polyplex Public on October 26, 2024 and sell it today you would earn a total of  14.00  from holding Polyplex Public or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Inspire Medical Systems  vs.  Polyplex Public

Inspire Medical Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspire Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Polyplex Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polyplex Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Polyplex Public reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inspire Medical and Polyplex Public

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

The idea behind Inspire Medical Systems and Polyplex Public 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.