Correlation Between Inspiration Healthcare and Sabien Technology

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

Diversification Opportunities for Inspiration Healthcare and Sabien Technology

-0.1

Correlation Coefficient

Inspiration Healthcare  Sabien Technology

Good diversification

The 3 months correlation between Inspiration and Sabien is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Inspiration Healthcare Group and Sabien Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabien Technology 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 Sabien Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabien Technology has no effect on the direction of Inspiration Healthcare i.e., Inspiration Healthcare and Sabien Technology go up and down completely randomly.

Pair Corralation between Inspiration Healthcare and Sabien Technology

Assuming the 90 days trading horizon Inspiration Healthcare Group is expected to under-perform the Sabien Technology. But the stock apears to be less risky and, when comparing its historical volatility, Inspiration Healthcare Group is 3.3 times less risky than Sabien Technology. The stock trades about -0.16 of its potential returns per unit of risk. The Sabien Technology Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Sabien Technology Group on October 7, 2024 and sell it today you would earn a total of  175.00  from holding Sabien Technology Group or generate 15.91% 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.  Sabien Technology 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.

Sabien Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sabien Technology Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sabien Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Inspiration Healthcare and Sabien Technology

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

The idea behind Inspiration Healthcare Group and Sabien Technology 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.