Correlation Between Guardant Health and InMode

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

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

Diversification Opportunities for Guardant Health and InMode

0.67

Correlation Coefficient

Guardant Health  InMode

Poor diversification

The 3 months correlation between Guardant and InMode is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Guardant Health and InMode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InMode and Guardant Health 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 Guardant Health are associated (or correlated) with InMode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InMode has no effect on the direction of Guardant Health i.e., Guardant Health and InMode go up and down completely randomly.

Pair Corralation between Guardant Health and InMode

Allowing for the 90-day total investment horizon Guardant Health is expected to generate 1.33 times more return on investment than InMode. However, Guardant Health is 1.33 times more volatile than InMode. It trades about 0.17 of its potential returns per unit of risk. InMode is currently generating about 0.04 per unit of risk. If you would invest  2,230  in Guardant Health on September 25, 2024 and sell it today you would earn a total of  937.00  from holding Guardant Health or generate 42.02% return on investment over 90 days.

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

Guardant Health  vs.  InMode

Guardant Health

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guardant Health are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Guardant Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

InMode

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in InMode are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, InMode is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Guardant Health and InMode

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

The idea behind Guardant Health and InMode 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 CEOs Directory module to screen CEOs from public companies around the world.