Correlation Between Inspiration Healthcare and Hilton Food

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

Diversification Opportunities for Inspiration Healthcare and Hilton Food

-0.41

Correlation Coefficient

Inspiration Healthcare  Hilton Food

Very good diversification

The 3 months correlation between Inspiration and Hilton is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Inspiration Healthcare Group and Hilton Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Food 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 Hilton Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Food Group has no effect on the direction of Inspiration Healthcare i.e., Inspiration Healthcare and Hilton Food go up and down completely randomly.

Pair Corralation between Inspiration Healthcare and Hilton Food

Assuming the 90 days trading horizon Inspiration Healthcare Group is expected to generate 10.03 times more return on investment than Hilton Food. However, Inspiration Healthcare is 10.03 times more volatile than Hilton Food Group. It trades about 0.08 of its potential returns per unit of risk. Hilton Food Group is currently generating about -0.1 per unit of risk. If you would invest  1,250  in Inspiration Healthcare Group on December 24, 2024 and sell it today you would earn a total of  400.00  from holding Inspiration Healthcare Group or generate 32.0% return on investment over 90 days.

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

Inspiration Healthcare Group  vs.  Hilton Food Group

Inspiration Healthcare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inspiration Healthcare Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Inspiration Healthcare exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hilton Food Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hilton Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Inspiration Healthcare and Hilton Food

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

The idea behind Inspiration Healthcare Group and Hilton Food 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..