Correlation Between DarioHealth Corp and InMode

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

By analyzing existing cross correlation between DarioHealth Corp and InMode, you can compare the effects of market volatilities on DarioHealth Corp and InMode 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 DarioHealth Corp with a short position of InMode. Check out your portfolio center. Please also check ongoing floating volatility patterns of DarioHealth Corp and InMode.

Diversification Opportunities for DarioHealth Corp and InMode

-0.31

Correlation Coefficient

DarioHealth Corp  InMode

Very good diversification

The 3 months correlation between DarioHealth and InMode is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding DarioHealth Corp and InMode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InMode and DarioHealth Corp 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 DarioHealth Corp are associated (or correlated) with InMode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InMode has no effect on the direction of DarioHealth Corp i.e., DarioHealth Corp and InMode go up and down completely randomly.

Pair Corralation between DarioHealth Corp and InMode

Given the investment horizon of 90 days DarioHealth Corp is expected to generate 6.28 times more return on investment than InMode. However, DarioHealth Corp is 6.28 times more volatile than InMode. It trades about 0.02 of its potential returns per unit of risk. InMode is currently generating about 0.06 per unit of risk. If you would invest  79.00  in DarioHealth Corp on December 30, 2024 and sell it today you would lose (17.00) from holding DarioHealth Corp or give up 21.52% of portfolio value over 90 days.

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

DarioHealth Corp  vs.  InMode

DarioHealth Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DarioHealth Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, DarioHealth Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

InMode

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in InMode are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, InMode may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with DarioHealth Corp and InMode

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

The idea behind DarioHealth Corp and InMode 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.