Correlation Between Insulet and Hyperfine

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

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

Diversification Opportunities for Insulet and Hyperfine

-0.5

Correlation Coefficient

Insulet  Hyperfine

Very good diversification

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

Pair Corralation between Insulet and Hyperfine

Given the investment horizon of 90 days Insulet is expected to generate 0.69 times more return on investment than Hyperfine. However, Insulet is 1.44 times less risky than Hyperfine. It trades about 0.18 of its potential returns per unit of risk. Hyperfine is currently generating about -0.04 per unit of risk. If you would invest  23,275  in Insulet on August 31, 2024 and sell it today you would earn a total of  3,417  from holding Insulet or generate 14.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.78%
Values	Daily Returns

Insulet  vs.  Hyperfine

Insulet

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Insulet are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Insulet exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hyperfine

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Insulet and Hyperfine

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

The idea behind Insulet and Hyperfine 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.