Correlation Between InPlay Oil and OrganiGram Holdings

Can any of the company-specific risk be diversified away by investing in both InPlay Oil and OrganiGram Holdings 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 InPlay Oil and OrganiGram Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for InPlay Oil and OrganiGram Holdings

0.24

Correlation Coefficient

InPlay Oil  OrganiGram Holdings

Modest diversification

The 3 months correlation between InPlay and OrganiGram is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and OrganiGram Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OrganiGram Holdings and InPlay Oil 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 InPlay Oil Corp are associated (or correlated) with OrganiGram Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OrganiGram Holdings has no effect on the direction of InPlay Oil i.e., InPlay Oil and OrganiGram Holdings go up and down completely randomly.

Pair Corralation between InPlay Oil and OrganiGram Holdings

Assuming the 90 days trading horizon InPlay Oil Corp is expected to generate 0.55 times more return on investment than OrganiGram Holdings. However, InPlay Oil Corp is 1.83 times less risky than OrganiGram Holdings. It trades about -0.06 of its potential returns per unit of risk. OrganiGram Holdings is currently generating about -0.07 per unit of risk. If you would invest  177.00  in InPlay Oil Corp on December 2, 2024 and sell it today you would lose (16.00) from holding InPlay Oil Corp or give up 9.04% of portfolio value over 90 days.

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

InPlay Oil Corp  vs.  OrganiGram Holdings

InPlay Oil Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days InPlay Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

OrganiGram Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days OrganiGram Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with InPlay Oil and OrganiGram Holdings

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

The idea behind InPlay Oil Corp and OrganiGram Holdings 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.