Correlation Between Im Cannabis and Theriva Biologics

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

Diversification Opportunities for Im Cannabis and Theriva Biologics

0.31

Correlation Coefficient

Im Cannabis  Theriva Biologics

Weak diversification

The 3 months correlation between IMCC and Theriva is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Im Cannabis Corp and Theriva Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theriva Biologics 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 Theriva Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theriva Biologics has no effect on the direction of Im Cannabis i.e., Im Cannabis and Theriva Biologics go up and down completely randomly.

Pair Corralation between Im Cannabis and Theriva Biologics

Given the investment horizon of 90 days Im Cannabis Corp is expected to under-perform the Theriva Biologics. But the stock apears to be less risky and, when comparing its historical volatility, Im Cannabis Corp is 2.1 times less risky than Theriva Biologics. The stock trades about -0.03 of its potential returns per unit of risk. The Theriva Biologics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  115.00  in Theriva Biologics on December 19, 2024 and sell it today you would earn a total of  4.00  from holding Theriva Biologics or generate 3.48% return on investment over 90 days.

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

Im Cannabis Corp  vs.  Theriva Biologics

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.

Theriva Biologics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Theriva Biologics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Theriva Biologics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Im Cannabis and Theriva Biologics

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

The idea behind Im Cannabis Corp and Theriva Biologics 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.