Correlation Between Im Cannabis and INC Research

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

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

Diversification Opportunities for Im Cannabis and INC Research

-0.66

Correlation Coefficient

Im Cannabis  INC Research

Excellent diversification

The 3 months correlation between IMCC and INC is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Im Cannabis Corp and INC Research Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INC Research Holdings and Im Cannabis 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 Im Cannabis Corp are associated (or correlated) with INC Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INC Research Holdings has no effect on the direction of Im Cannabis i.e., Im Cannabis and INC Research go up and down completely randomly.

Pair Corralation between Im Cannabis and INC Research

Given the investment horizon of 90 days Im Cannabis Corp is expected to under-perform the INC Research. But the stock apears to be less risky and, when comparing its historical volatility, Im Cannabis Corp is 1.1 times less risky than INC Research. The stock trades about -0.07 of its potential returns per unit of risk. The INC Research Holdings is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  140.00  in INC Research Holdings on October 6, 2024 and sell it today you would earn a total of  26.00  from holding INC Research Holdings or generate 18.57% return on investment over 90 days.

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

Im Cannabis Corp  vs.  INC Research Holdings

Im Cannabis Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Im Cannabis Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Im Cannabis exhibited solid returns over the last few months and may actually be approaching a breakup point.

INC Research Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INC Research Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, INC Research is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Im Cannabis and INC Research

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

The idea behind Im Cannabis Corp and INC Research Holdings 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.