Correlation Between Inspiration Healthcare and SBM Offshore

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

By analyzing existing cross correlation between Inspiration Healthcare Group and SBM Offshore NV, you can compare the effects of market volatilities on Inspiration Healthcare and SBM Offshore 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 Inspiration Healthcare with a short position of SBM Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspiration Healthcare and SBM Offshore.

Diversification Opportunities for Inspiration Healthcare and SBM Offshore

0.05

Correlation Coefficient

Inspiration Healthcare  SBM Offshore

Significant diversification

The 3 months correlation between Inspiration and SBM is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Inspiration Healthcare Group and SBM Offshore NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM Offshore NV and Inspiration Healthcare 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 Inspiration Healthcare Group are associated (or correlated) with SBM Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM Offshore NV has no effect on the direction of Inspiration Healthcare i.e., Inspiration Healthcare and SBM Offshore go up and down completely randomly.

Pair Corralation between Inspiration Healthcare and SBM Offshore

Assuming the 90 days trading horizon Inspiration Healthcare Group is expected to under-perform the SBM Offshore. In addition to that, Inspiration Healthcare is 2.39 times more volatile than SBM Offshore NV. It trades about -0.05 of its total potential returns per unit of risk. SBM Offshore NV is currently generating about 0.04 per unit of volatility. If you would invest  1,260  in SBM Offshore NV on October 4, 2024 and sell it today you would earn a total of  417.00  from holding SBM Offshore NV or generate 33.1% return on investment over 90 days.

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

Inspiration Healthcare Group  vs.  SBM Offshore NV

Inspiration Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspiration Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

SBM Offshore NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBM Offshore NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, SBM Offshore is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Inspiration Healthcare and SBM Offshore

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

The idea behind Inspiration Healthcare Group and SBM Offshore NV 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.