Correlation Between Inspira Technologies and Modular Medical

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

Diversification Opportunities for Inspira Technologies and Modular Medical

-0.13

Correlation Coefficient

Inspira Technologies  Modular Medical

Good diversification

The 3 months correlation between Inspira and Modular is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Inspira Technologies Oxy and Modular Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modular Medical 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 Modular Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modular Medical has no effect on the direction of Inspira Technologies i.e., Inspira Technologies and Modular Medical go up and down completely randomly.

Pair Corralation between Inspira Technologies and Modular Medical

Assuming the 90 days horizon Inspira Technologies Oxy is expected to generate 4.23 times more return on investment than Modular Medical. However, Inspira Technologies is 4.23 times more volatile than Modular Medical. It trades about 0.06 of its potential returns per unit of risk. Modular Medical is currently generating about -0.02 per unit of risk. If you would invest  24.00  in Inspira Technologies Oxy on December 23, 2024 and sell it today you would lose (4.00) from holding Inspira Technologies Oxy or give up 16.67% of portfolio value over 90 days.

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

Inspira Technologies Oxy  vs.  Modular Medical

Inspira Technologies Oxy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inspira Technologies Oxy are ranked lower than 4 (%) 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.

Modular Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Modular Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Modular Medical is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Inspira Technologies and Modular Medical

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

The idea behind Inspira Technologies Oxy and Modular Medical 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.