Correlation Between InMode and Lixil Group

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

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

Diversification Opportunities for InMode and Lixil Group

-0.35

Correlation Coefficient

InMode  Lixil Group

Very good diversification

The 3 months correlation between InMode and Lixil is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding InMode and Lixil Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixil Group Corp 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 Lixil Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixil Group Corp has no effect on the direction of InMode i.e., InMode and Lixil Group go up and down completely randomly.

Pair Corralation between InMode and Lixil Group

Given the investment horizon of 90 days InMode is expected to generate 2.08 times more return on investment than Lixil Group. However, InMode is 2.08 times more volatile than Lixil Group Corp. It trades about 0.03 of its potential returns per unit of risk. Lixil Group Corp is currently generating about -0.15 per unit of risk. If you would invest  1,665  in InMode on September 24, 2024 and sell it today you would earn a total of  43.00  from holding InMode or generate 2.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

InMode  vs.  Lixil Group Corp

InMode

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in InMode are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, InMode is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Lixil Group Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lixil Group Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with InMode and Lixil Group

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

The idea behind InMode and Lixil Group Corp 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.