Correlation Between Im Cannabis and Pharmacielo

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

Diversification Opportunities for Im Cannabis and Pharmacielo

0.37

Correlation Coefficient

Im Cannabis  Pharmacielo

Weak diversification

The 3 months correlation between IMCC and Pharmacielo is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Im Cannabis Corp and Pharmacielo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharmacielo 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 Pharmacielo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharmacielo has no effect on the direction of Im Cannabis i.e., Im Cannabis and Pharmacielo go up and down completely randomly.

Pair Corralation between Im Cannabis and Pharmacielo

Given the investment horizon of 90 days Im Cannabis Corp is expected to under-perform the Pharmacielo. But the stock apears to be less risky and, when comparing its historical volatility, Im Cannabis Corp is 2.06 times less risky than Pharmacielo. The stock trades about -0.15 of its potential returns per unit of risk. The Pharmacielo is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6.20  in Pharmacielo on December 3, 2024 and sell it today you would lose (0.60) from holding Pharmacielo or give up 9.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Im Cannabis Corp  vs.  Pharmacielo

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 weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pharmacielo

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pharmacielo are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Pharmacielo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Im Cannabis and Pharmacielo

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

The idea behind Im Cannabis Corp and Pharmacielo 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 Global Correlations module to find global opportunities by holding instruments from different markets.