Correlation Between Venus Concept and InspireMD

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

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

Diversification Opportunities for Venus Concept and InspireMD

-0.04

Correlation Coefficient

Venus Concept  InspireMD

Good diversification

The 3 months correlation between Venus and InspireMD is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Venus Concept and InspireMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InspireMD and Venus Concept 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 Venus Concept 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 Venus Concept i.e., Venus Concept and InspireMD go up and down completely randomly.

Pair Corralation between Venus Concept and InspireMD

Given the investment horizon of 90 days Venus Concept is expected to generate 2.9 times more return on investment than InspireMD. However, Venus Concept is 2.9 times more volatile than InspireMD. It trades about 0.04 of its potential returns per unit of risk. InspireMD is currently generating about -0.01 per unit of risk. If you would invest  355.00  in Venus Concept on December 20, 2024 and sell it today you would lose (30.00) from holding Venus Concept or give up 8.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Venus Concept  vs.  InspireMD

Venus Concept

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Venus Concept are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Venus Concept displayed solid returns over the last few months and may actually be approaching a breakup point.

InspireMD

Risk-Adjusted Performance

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.

Pair Trading with Venus Concept and InspireMD

The main advantage of trading using opposite Venus Concept and InspireMD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Venus Concept 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 Venus Concept 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.