Correlation Between Heart Test and InspireMD

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

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

Diversification Opportunities for Heart Test and InspireMD

0.41

Correlation Coefficient

Heart Test  InspireMD

Very weak diversification

The 3 months correlation between Heart and InspireMD is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Heart Test Laboratories and InspireMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InspireMD and Heart Test 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 Heart Test Laboratories 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 Heart Test i.e., Heart Test and InspireMD go up and down completely randomly.

Pair Corralation between Heart Test and InspireMD

Given the investment horizon of 90 days Heart Test Laboratories is expected to under-perform the InspireMD. In addition to that, Heart Test is 2.09 times more volatile than InspireMD. It trades about -0.04 of its total potential returns per unit of risk. InspireMD is currently generating about 0.03 per unit of volatility. If you would invest  243.00  in InspireMD on October 5, 2024 and sell it today you would earn a total of  23.00  from holding InspireMD or generate 9.47% return on investment over 90 days.

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

Heart Test Laboratories  vs.  InspireMD

Heart Test Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

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

InspireMD

Risk-Adjusted Performance

0 of 100

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 Heart Test and InspireMD

The main advantage of trading using opposite Heart Test and InspireMD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heart Test 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 Heart Test Laboratories 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.