Correlation Between Rapid Therapeutic and InspireMD

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

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

Diversification Opportunities for Rapid Therapeutic and InspireMD

0.03

Correlation Coefficient

Rapid Therapeutic  InspireMD

Significant diversification

The 3 months correlation between Rapid and InspireMD is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Rapid Therapeutic Science and InspireMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InspireMD and Rapid Therapeutic 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 Rapid Therapeutic Science are associated (or correlated) with InspireMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InspireMD has no effect on the direction of Rapid Therapeutic i.e., Rapid Therapeutic and InspireMD go up and down completely randomly.

Pair Corralation between Rapid Therapeutic and InspireMD

Given the investment horizon of 90 days Rapid Therapeutic Science is expected to generate 6.71 times more return on investment than InspireMD. However, Rapid Therapeutic is 6.71 times more volatile than InspireMD. It trades about 0.23 of its potential returns per unit of risk. InspireMD is currently generating about -0.01 per unit of risk. If you would invest  0.20  in Rapid Therapeutic Science on October 27, 2024 and sell it today you would earn a total of  0.20  from holding Rapid Therapeutic Science or generate 100.0% return on investment over 90 days.

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

Rapid Therapeutic Science  vs.  InspireMD

Rapid Therapeutic Science

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rapid Therapeutic Science are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Rapid Therapeutic disclosed solid returns over the last few months and may actually be approaching a breakup point.

InspireMD

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in InspireMD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, InspireMD reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rapid Therapeutic and InspireMD

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

The idea behind Rapid Therapeutic Science and InspireMD 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 Transaction History module to view history of all your transactions and understand their impact on performance.