Correlation Between InMode and South Jersey

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

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

Diversification Opportunities for InMode and South Jersey

-0.5

Correlation Coefficient

InMode  South Jersey

Very good diversification

The 3 months correlation between InMode and South is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding InMode and South Jersey Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Jersey Industries 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 South Jersey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Jersey Industries has no effect on the direction of InMode i.e., InMode and South Jersey go up and down completely randomly.

Pair Corralation between InMode and South Jersey

Given the investment horizon of 90 days InMode is expected to under-perform the South Jersey. In addition to that, InMode is 9.3 times more volatile than South Jersey Industries. It trades about -0.03 of its total potential returns per unit of risk. South Jersey Industries is currently generating about -0.14 per unit of volatility. If you would invest  6,885  in South Jersey Industries on September 18, 2024 and sell it today you would lose (140.00) from holding South Jersey Industries or give up 2.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	9.09%
Values	Daily Returns

InMode  vs.  South Jersey Industries

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

South Jersey Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days South Jersey Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, South Jersey is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with InMode and South Jersey

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

The idea behind InMode and South Jersey Industries 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..