Correlation Between Inspiration Healthcare and Eclectic Bar

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

Diversification Opportunities for Inspiration Healthcare and Eclectic Bar

-0.91

Correlation Coefficient

Inspiration Healthcare  Eclectic Bar

Pay attention - limited upside

The 3 months correlation between Inspiration and Eclectic is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Inspiration Healthcare Group and Eclectic Bar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eclectic Bar Group 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 Eclectic Bar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eclectic Bar Group has no effect on the direction of Inspiration Healthcare i.e., Inspiration Healthcare and Eclectic Bar go up and down completely randomly.

Pair Corralation between Inspiration Healthcare and Eclectic Bar

Assuming the 90 days trading horizon Inspiration Healthcare Group is expected to under-perform the Eclectic Bar. But the stock apears to be less risky and, when comparing its historical volatility, Inspiration Healthcare Group is 1.24 times less risky than Eclectic Bar. The stock trades about -0.04 of its potential returns per unit of risk. The Eclectic Bar Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,900  in Eclectic Bar Group on October 24, 2024 and sell it today you would earn a total of  800.00  from holding Eclectic Bar Group or generate 20.51% return on investment over 90 days.

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

Inspiration Healthcare Group  vs.  Eclectic Bar Group

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 uncertain 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.

Eclectic Bar Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eclectic Bar Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Eclectic Bar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inspiration Healthcare and Eclectic Bar

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

The idea behind Inspiration Healthcare Group and Eclectic Bar Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.