Correlation Between InMode and Green Impact

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

By analyzing existing cross correlation between InMode and Green Impact Partners, you can compare the effects of market volatilities on InMode and Green Impact 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 Green Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of InMode and Green Impact.

Diversification Opportunities for InMode and Green Impact

-0.64

Correlation Coefficient

InMode  Green Impact

Excellent diversification

The 3 months correlation between InMode and Green is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding InMode and Green Impact Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Impact Partners 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 Green Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Impact Partners has no effect on the direction of InMode i.e., InMode and Green Impact go up and down completely randomly.

Pair Corralation between InMode and Green Impact

Given the investment horizon of 90 days InMode is expected to under-perform the Green Impact. But the stock apears to be less risky and, when comparing its historical volatility, InMode is 1.28 times less risky than Green Impact. The stock trades about -0.03 of its potential returns per unit of risk. The Green Impact Partners is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  425.00  in Green Impact Partners on October 7, 2024 and sell it today you would lose (177.00) from holding Green Impact Partners or give up 41.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

InMode  vs.  Green Impact Partners

InMode

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InMode are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, InMode exhibited solid returns over the last few months and may actually be approaching a breakup point.

Green Impact Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Impact Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Green Impact is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with InMode and Green Impact

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

The idea behind InMode and Green Impact Partners 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.