Correlation Between Paragon 28 and InspireMD

Can any of the company-specific risk be diversified away by investing in both Paragon 28 and InspireMD 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 Paragon 28 and InspireMD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Paragon 28 and InspireMD, you can compare the effects of market volatilities on Paragon 28 and InspireMD 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 Paragon 28 with a short position of InspireMD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paragon 28 and InspireMD.

Diversification Opportunities for Paragon 28 and InspireMD

0.21

Correlation Coefficient

Paragon 28  InspireMD

Modest diversification

The 3 months correlation between Paragon and InspireMD is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Paragon 28 and InspireMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InspireMD and Paragon 28 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 Paragon 28 are associated (or correlated) with InspireMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InspireMD has no effect on the direction of Paragon 28 i.e., Paragon 28 and InspireMD go up and down completely randomly.

Pair Corralation between Paragon 28 and InspireMD

Considering the 90-day investment horizon Paragon 28 is expected to generate 0.42 times more return on investment than InspireMD. However, Paragon 28 is 2.4 times less risky than InspireMD. It trades about 0.24 of its potential returns per unit of risk. InspireMD is currently generating about -0.01 per unit of risk. If you would invest  1,009  in Paragon 28 on December 22, 2024 and sell it today you would earn a total of  292.00  from holding Paragon 28 or generate 28.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Paragon 28  vs.  InspireMD

Paragon 28

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Paragon 28 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Paragon 28 sustained solid returns over the last few months and may actually be approaching a breakup point.

InspireMD

Risk-Adjusted Performance

Very Weak

Over the last 90 days InspireMD has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, InspireMD is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Paragon 28 and InspireMD

The main advantage of trading using opposite Paragon 28 and InspireMD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paragon 28 position performs unexpectedly, InspireMD 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 InspireMD will offset losses from the drop in InspireMD's long position.

The idea behind Paragon 28 and InspireMD 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.