Correlation Between Beyond Air and InspireMD

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

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

Diversification Opportunities for Beyond Air and InspireMD

0.25

Correlation Coefficient

Beyond Air  InspireMD

Modest diversification

The 3 months correlation between Beyond and InspireMD is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Air and InspireMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InspireMD and Beyond Air 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 Beyond Air 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 Beyond Air i.e., Beyond Air and InspireMD go up and down completely randomly.

Pair Corralation between Beyond Air and InspireMD

Given the investment horizon of 90 days Beyond Air is expected to under-perform the InspireMD. In addition to that, Beyond Air is 1.14 times more volatile than InspireMD. It trades about -0.06 of its total potential returns per unit of risk. InspireMD is currently generating about 0.07 per unit of volatility. If you would invest  92.00  in InspireMD on September 23, 2024 and sell it today you would earn a total of  208.00  from holding InspireMD or generate 226.09% return on investment over 90 days.

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

Beyond Air  vs.  InspireMD

Beyond Air

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Beyond Air are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent forward indicators, Beyond Air reported solid returns over the last few months and may actually be approaching a breakup point.

InspireMD

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in InspireMD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, InspireMD may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Beyond Air and InspireMD

The main advantage of trading using opposite Beyond Air and InspireMD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beyond Air 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 Beyond Air 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.