Correlation Between Inspira Technologies and Abbott Laboratories

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

Diversification Opportunities for Inspira Technologies and Abbott Laboratories

0.25

Correlation Coefficient

Inspira Technologies  Abbott Laboratories

Modest diversification

The 3 months correlation between Inspira and Abbott is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Inspira Technologies Oxy and Abbott Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbott Laboratories 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 Abbott Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbott Laboratories has no effect on the direction of Inspira Technologies i.e., Inspira Technologies and Abbott Laboratories go up and down completely randomly.

Pair Corralation between Inspira Technologies and Abbott Laboratories

Assuming the 90 days horizon Inspira Technologies Oxy is expected to generate 14.6 times more return on investment than Abbott Laboratories. However, Inspira Technologies is 14.6 times more volatile than Abbott Laboratories. It trades about 0.1 of its potential returns per unit of risk. Abbott Laboratories is currently generating about 0.19 per unit of risk. If you would invest  29.00  in Inspira Technologies Oxy on November 29, 2024 and sell it today you would earn a total of  6.00  from holding Inspira Technologies Oxy or generate 20.69% return on investment over 90 days.

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

Inspira Technologies Oxy  vs.  Abbott Laboratories

Inspira Technologies Oxy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inspira Technologies Oxy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Inspira Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Abbott Laboratories

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Abbott Laboratories are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental drivers, Abbott Laboratories unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inspira Technologies and Abbott Laboratories

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

The idea behind Inspira Technologies Oxy and Abbott Laboratories 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.