Correlation Between InspireMD and Senseonics Holdings

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

By analyzing existing cross correlation between InspireMD and Senseonics Holdings, you can compare the effects of market volatilities on InspireMD and Senseonics Holdings 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 InspireMD with a short position of Senseonics Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of InspireMD and Senseonics Holdings.

Diversification Opportunities for InspireMD and Senseonics Holdings

0.25

Correlation Coefficient

InspireMD  Senseonics Holdings

Modest diversification

The 3 months correlation between InspireMD and Senseonics is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding InspireMD and Senseonics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senseonics Holdings and InspireMD 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 InspireMD are associated (or correlated) with Senseonics Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senseonics Holdings has no effect on the direction of InspireMD i.e., InspireMD and Senseonics Holdings go up and down completely randomly.

Pair Corralation between InspireMD and Senseonics Holdings

Given the investment horizon of 90 days InspireMD is expected to generate 0.75 times more return on investment than Senseonics Holdings. However, InspireMD is 1.34 times less risky than Senseonics Holdings. It trades about 0.03 of its potential returns per unit of risk. Senseonics Holdings is currently generating about 0.0 per unit of risk. If you would invest  243.00  in InspireMD on October 5, 2024 and sell it today you would earn a total of  23.00  from holding InspireMD or generate 9.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

InspireMD  vs.  Senseonics Holdings

InspireMD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InspireMD has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, InspireMD is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Senseonics Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Senseonics Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Senseonics Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InspireMD and Senseonics Holdings

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

The idea behind InspireMD and Senseonics Holdings 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 Valuation module to check real value of public entities based on technical and fundamental data.