Correlation Between Inspiration Healthcare and International Consolidated

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

Diversification Opportunities for Inspiration Healthcare and International Consolidated

-0.95

Correlation Coefficient

Inspiration Healthcare  International Consolidated

Pay attention - limited upside

The 3 months correlation between Inspiration and International is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Inspiration Healthcare Group and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Inspiration Healthcare i.e., Inspiration Healthcare and International Consolidated go up and down completely randomly.

Pair Corralation between Inspiration Healthcare and International Consolidated

Assuming the 90 days trading horizon Inspiration Healthcare Group is expected to under-perform the International Consolidated. In addition to that, Inspiration Healthcare is 2.17 times more volatile than International Consolidated Airlines. It trades about -0.05 of its total potential returns per unit of risk. International Consolidated Airlines is currently generating about 0.08 per unit of volatility. If you would invest  16,022  in International Consolidated Airlines on October 11, 2024 and sell it today you would earn a total of  14,658  from holding International Consolidated Airlines or generate 91.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Inspiration Healthcare Group  vs.  International Consolidated Air

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.

International Consolidated

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inspiration Healthcare and International Consolidated

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

The idea behind Inspiration Healthcare Group and International Consolidated Airlines 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.