Correlation Between InMode and Applied Digital
Can any of the company-specific risk be diversified away by investing in both InMode and Applied Digital 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 InMode and Applied Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InMode and Applied Digital, you can compare the effects of market volatilities on InMode and Applied Digital 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 InMode with a short position of Applied Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of InMode and Applied Digital.
Diversification Opportunities for InMode and Applied Digital
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between InMode and Applied is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding InMode and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital and InMode 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 InMode are associated (or correlated) with Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of InMode i.e., InMode and Applied Digital go up and down completely randomly.
Pair Corralation between InMode and Applied Digital
Given the investment horizon of 90 days InMode is expected to under-perform the Applied Digital. But the stock apears to be less risky and, when comparing its historical volatility, InMode is 3.45 times less risky than Applied Digital. The stock trades about -0.02 of its potential returns per unit of risk. The Applied Digital is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 962.00 in Applied Digital on December 2, 2024 and sell it today you would lose (162.00) from holding Applied Digital or give up 16.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
InMode vs. Applied Digital
Performance |
Timeline |
InMode |
Applied Digital |
InMode and Applied Digital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with InMode and Applied Digital
The main advantage of trading using opposite InMode and Applied Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InMode position performs unexpectedly, Applied Digital 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 Applied Digital will offset losses from the drop in Applied Digital's long position.InMode vs. TransMedics Group | InMode vs. Inspire Medical Systems | InMode vs. Insulet | InMode vs. DexCom Inc |
Applied Digital vs. Magic Empire Global | Applied Digital vs. Zhong Yang Financial | Applied Digital vs. Netcapital | Applied Digital vs. Lazard |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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