Correlation Between Incannex Healthcare and Akanda Corp

Can any of the company-specific risk be diversified away by investing in both Incannex Healthcare and Akanda Corp 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 Incannex Healthcare and Akanda Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Incannex Healthcare and Akanda Corp

-0.04

Correlation Coefficient

Incannex Healthcare  Akanda Corp

Good diversification

The 3 months correlation between Incannex and Akanda is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Incannex Healthcare Ltd and Akanda Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akanda Corp and Incannex Healthcare 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 Incannex Healthcare Ltd are associated (or correlated) with Akanda Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akanda Corp has no effect on the direction of Incannex Healthcare i.e., Incannex Healthcare and Akanda Corp go up and down completely randomly.

Pair Corralation between Incannex Healthcare and Akanda Corp

Given the investment horizon of 90 days Incannex Healthcare Ltd is expected to generate 1.08 times more return on investment than Akanda Corp. However, Incannex Healthcare is 1.08 times more volatile than Akanda Corp. It trades about 0.18 of its potential returns per unit of risk. Akanda Corp is currently generating about -0.03 per unit of risk. If you would invest  168.00  in Incannex Healthcare Ltd on October 23, 2024 and sell it today you would earn a total of  25.00  from holding Incannex Healthcare Ltd or generate 14.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Incannex Healthcare Ltd  vs.  Akanda Corp

Incannex Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Incannex Healthcare Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Akanda Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akanda Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

Pair Trading with Incannex Healthcare and Akanda Corp

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

The idea behind Incannex Healthcare Ltd and Akanda 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 Global Correlations module to find global opportunities by holding instruments from different markets.