Correlation Between Im Cannabis and NLS Pharmaceutics

Can any of the company-specific risk be diversified away by investing in both Im Cannabis and NLS Pharmaceutics 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 NLS Pharmaceutics 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 NLS Pharmaceutics AG, you can compare the effects of market volatilities on Im Cannabis and NLS Pharmaceutics 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 NLS Pharmaceutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Im Cannabis and NLS Pharmaceutics.

Diversification Opportunities for Im Cannabis and NLS Pharmaceutics

0.44

Correlation Coefficient

Im Cannabis  NLS Pharmaceutics

Very weak diversification

The 3 months correlation between IMCC and NLS is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Im Cannabis Corp and NLS Pharmaceutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NLS Pharmaceutics 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 NLS Pharmaceutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NLS Pharmaceutics has no effect on the direction of Im Cannabis i.e., Im Cannabis and NLS Pharmaceutics go up and down completely randomly.

Pair Corralation between Im Cannabis and NLS Pharmaceutics

Given the investment horizon of 90 days Im Cannabis Corp is expected to under-perform the NLS Pharmaceutics. But the stock apears to be less risky and, when comparing its historical volatility, Im Cannabis Corp is 2.56 times less risky than NLS Pharmaceutics. The stock trades about -0.04 of its potential returns per unit of risk. The NLS Pharmaceutics AG is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  200.00  in NLS Pharmaceutics AG on December 18, 2024 and sell it today you would lose (45.00) from holding NLS Pharmaceutics AG or give up 22.5% of portfolio value over 90 days.

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

Im Cannabis Corp  vs.  NLS Pharmaceutics AG

Im Cannabis Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Im Cannabis Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

NLS Pharmaceutics

Risk-Adjusted Performance

Weak

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

Pair Trading with Im Cannabis and NLS Pharmaceutics

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

The idea behind Im Cannabis Corp and NLS Pharmaceutics AG 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.