Correlation Between Inspira Technologies and ReShape Lifesciences

Can any of the company-specific risk be diversified away by investing in both Inspira Technologies and ReShape Lifesciences 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 Inspira Technologies and ReShape Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Inspira Technologies Oxy and ReShape Lifesciences, you can compare the effects of market volatilities on Inspira Technologies and ReShape Lifesciences 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 Inspira Technologies with a short position of ReShape Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inspira Technologies and ReShape Lifesciences.

Diversification Opportunities for Inspira Technologies and ReShape Lifesciences

0.78

Correlation Coefficient

Inspira Technologies  ReShape Lifesciences

Poor diversification

The 3 months correlation between Inspira and ReShape is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Inspira Technologies Oxy and ReShape Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReShape Lifesciences and Inspira Technologies 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 Inspira Technologies Oxy are associated (or correlated) with ReShape Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReShape Lifesciences has no effect on the direction of Inspira Technologies i.e., Inspira Technologies and ReShape Lifesciences go up and down completely randomly.

Pair Corralation between Inspira Technologies and ReShape Lifesciences

Given the investment horizon of 90 days Inspira Technologies Oxy is expected to under-perform the ReShape Lifesciences. In addition to that, Inspira Technologies is 1.46 times more volatile than ReShape Lifesciences. It trades about -0.11 of its total potential returns per unit of risk. ReShape Lifesciences is currently generating about -0.08 per unit of volatility. If you would invest  566.00  in ReShape Lifesciences on October 12, 2024 and sell it today you would lose (87.00) from holding ReShape Lifesciences or give up 15.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.35%
Values	Daily Returns

Inspira Technologies Oxy  vs.  ReShape Lifesciences

Inspira Technologies Oxy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inspira Technologies Oxy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

ReShape Lifesciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ReShape Lifesciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, ReShape Lifesciences is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Inspira Technologies and ReShape Lifesciences

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

The idea behind Inspira Technologies Oxy and ReShape Lifesciences 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.