Correlation Between Ecofibre and Imugene

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

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

Diversification Opportunities for Ecofibre and Imugene

0.57

Correlation Coefficient

Ecofibre  Imugene

Very weak diversification

The 3 months correlation between Ecofibre and Imugene is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre and Imugene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imugene and Ecofibre 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 Ecofibre are associated (or correlated) with Imugene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imugene has no effect on the direction of Ecofibre i.e., Ecofibre and Imugene go up and down completely randomly.

Pair Corralation between Ecofibre and Imugene

Assuming the 90 days trading horizon Ecofibre is expected to under-perform the Imugene. In addition to that, Ecofibre is 1.2 times more volatile than Imugene. It trades about -0.03 of its total potential returns per unit of risk. Imugene is currently generating about -0.02 per unit of volatility. If you would invest  3.70  in Imugene on December 31, 2024 and sell it today you would lose (0.40) from holding Imugene or give up 10.81% of portfolio value over 90 days.

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

Ecofibre  vs.  Imugene

Ecofibre

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecofibre has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Imugene

Risk-Adjusted Performance

Very Weak

Over the last 90 days Imugene has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Imugene is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ecofibre and Imugene

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

The idea behind Ecofibre and Imugene 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 Commodity Directory module to find actively traded commodities issued by global exchanges.