Correlation Between Benchmark Botanics and Incannex Healthcare

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

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

Diversification Opportunities for Benchmark Botanics and Incannex Healthcare

0.91

Correlation Coefficient

Benchmark Botanics  Incannex Healthcare

Almost no diversification

The 3 months correlation between Benchmark and Incannex is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Botanics and Incannex Healthcare Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incannex Healthcare and Benchmark Botanics 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 Benchmark Botanics are associated (or correlated) with Incannex Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incannex Healthcare has no effect on the direction of Benchmark Botanics i.e., Benchmark Botanics and Incannex Healthcare go up and down completely randomly.

Pair Corralation between Benchmark Botanics and Incannex Healthcare

Assuming the 90 days horizon Benchmark Botanics is expected to under-perform the Incannex Healthcare. In addition to that, Benchmark Botanics is 2.28 times more volatile than Incannex Healthcare Ltd. It trades about -0.13 of its total potential returns per unit of risk. Incannex Healthcare Ltd is currently generating about -0.28 per unit of volatility. If you would invest  209.00  in Incannex Healthcare Ltd on December 30, 2024 and sell it today you would lose (139.00) from holding Incannex Healthcare Ltd or give up 66.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Benchmark Botanics  vs.  Incannex Healthcare Ltd

Benchmark Botanics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benchmark Botanics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Incannex Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Incannex Healthcare Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Benchmark Botanics and Incannex Healthcare

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

The idea behind Benchmark Botanics and Incannex Healthcare Ltd 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.