Correlation Between Im Cannabis and Neurosense Therapeutics

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

Diversification Opportunities for Im Cannabis and Neurosense Therapeutics

-0.39

Correlation Coefficient

Im Cannabis  Neurosense Therapeutics

Very good diversification

The 3 months correlation between IMCC and Neurosense is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Im Cannabis Corp and Neurosense Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neurosense Therapeutics 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 Neurosense Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neurosense Therapeutics has no effect on the direction of Im Cannabis i.e., Im Cannabis and Neurosense Therapeutics go up and down completely randomly.

Pair Corralation between Im Cannabis and Neurosense Therapeutics

Given the investment horizon of 90 days Im Cannabis is expected to generate 2.09 times less return on investment than Neurosense Therapeutics. In addition to that, Im Cannabis is 1.33 times more volatile than Neurosense Therapeutics. It trades about 0.01 of its total potential returns per unit of risk. Neurosense Therapeutics is currently generating about 0.02 per unit of volatility. If you would invest  161.00  in Neurosense Therapeutics on October 23, 2024 and sell it today you would lose (52.00) from holding Neurosense Therapeutics or give up 32.3% of portfolio value over 90 days.

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

Im Cannabis Corp  vs.  Neurosense Therapeutics

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.

Neurosense Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neurosense Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Neurosense Therapeutics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Im Cannabis and Neurosense Therapeutics

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

The idea behind Im Cannabis Corp and Neurosense Therapeutics 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.