Correlation Between Inspiration Healthcare and BP PLC

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

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

Diversification Opportunities for Inspiration Healthcare and BP PLC

0.05

Correlation Coefficient

Inspiration Healthcare  BP PLC

Significant diversification

The 3 months correlation between Inspiration and BP PLC is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Inspiration Healthcare Group and BP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC and Inspiration Healthcare 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 Inspiration Healthcare Group are associated (or correlated) with BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC has no effect on the direction of Inspiration Healthcare i.e., Inspiration Healthcare and BP PLC go up and down completely randomly.

Pair Corralation between Inspiration Healthcare and BP PLC

Assuming the 90 days trading horizon Inspiration Healthcare Group is expected to under-perform the BP PLC. In addition to that, Inspiration Healthcare is 3.71 times more volatile than BP PLC. It trades about -0.01 of its total potential returns per unit of risk. BP PLC is currently generating about -0.01 per unit of volatility. If you would invest  40,844  in BP PLC on March 30, 2025 and sell it today you would lose (3,804) from holding BP PLC or give up 9.31% of portfolio value over 90 days.

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

Inspiration Healthcare Group  vs.  BP PLC

Inspiration Healthcare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inspiration Healthcare Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Inspiration Healthcare exhibited solid returns over the last few months and may actually be approaching a breakup point.

BP PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days BP PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Inspiration Healthcare and BP PLC

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

The idea behind Inspiration Healthcare Group and BP PLC 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.