Correlation Between Inspiration Healthcare and Baker Steel

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

Diversification Opportunities for Inspiration Healthcare and Baker Steel

-0.21

Correlation Coefficient

Inspiration Healthcare  Baker Steel

Very good diversification

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

Pair Corralation between Inspiration Healthcare and Baker Steel

Assuming the 90 days trading horizon Inspiration Healthcare Group is expected to under-perform the Baker Steel. In addition to that, Inspiration Healthcare is 1.02 times more volatile than Baker Steel Resources. It trades about -0.29 of its total potential returns per unit of risk. Baker Steel Resources is currently generating about 0.12 per unit of volatility. If you would invest  4,950  in Baker Steel Resources on September 3, 2024 and sell it today you would earn a total of  850.00  from holding Baker Steel Resources or generate 17.17% return on investment over 90 days.

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

Inspiration Healthcare Group  vs.  Baker Steel Resources

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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Baker Steel Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Steel Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Baker Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inspiration Healthcare and Baker Steel

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

The idea behind Inspiration Healthcare Group and Baker Steel Resources 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.