Correlation Between INC Research and Im Cannabis

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

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

Diversification Opportunities for INC Research and Im Cannabis

-0.66

Correlation Coefficient

INC Research  Im Cannabis

Excellent diversification

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

Pair Corralation between INC Research and Im Cannabis

Given the investment horizon of 90 days INC Research Holdings is expected to generate 1.13 times more return on investment than Im Cannabis. However, INC Research is 1.13 times more volatile than Im Cannabis Corp. It trades about 0.12 of its potential returns per unit of risk. Im Cannabis Corp is currently generating about -0.08 per unit of risk. If you would invest  148.00  in INC Research Holdings on October 5, 2024 and sell it today you would earn a total of  18.00  from holding INC Research Holdings or generate 12.16% return on investment over 90 days.

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

INC Research Holdings  vs.  Im Cannabis Corp

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.

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.

Pair Trading with INC Research and Im Cannabis

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

The idea behind INC Research Holdings and Im Cannabis Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.