Correlation Between Recursion Pharmaceuticals and InMode

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

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

Diversification Opportunities for Recursion Pharmaceuticals and InMode

0.36

Correlation Coefficient

Recursion Pharmaceuticals  InMode

Weak diversification

The 3 months correlation between Recursion and InMode is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Recursion Pharmaceuticals and InMode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InMode and Recursion Pharmaceuticals 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 Recursion Pharmaceuticals 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 Recursion Pharmaceuticals i.e., Recursion Pharmaceuticals and InMode go up and down completely randomly.

Pair Corralation between Recursion Pharmaceuticals and InMode

Given the investment horizon of 90 days Recursion Pharmaceuticals is expected to generate 1.84 times more return on investment than InMode. However, Recursion Pharmaceuticals is 1.84 times more volatile than InMode. It trades about 0.06 of its potential returns per unit of risk. InMode is currently generating about 0.06 per unit of risk. If you would invest  657.00  in Recursion Pharmaceuticals on September 13, 2024 and sell it today you would earn a total of  89.00  from holding Recursion Pharmaceuticals or generate 13.55% return on investment over 90 days.

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

Recursion Pharmaceuticals  vs.  InMode

Recursion Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Recursion Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Recursion Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

InMode

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in InMode are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, InMode may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Recursion Pharmaceuticals and InMode

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

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.