Correlation Between Incannex Healthcare and Curative Biotechnology

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

Diversification Opportunities for Incannex Healthcare and Curative Biotechnology

-0.37

Correlation Coefficient

Incannex Healthcare  Curative Biotechnology

Very good diversification

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

Pair Corralation between Incannex Healthcare and Curative Biotechnology

Given the investment horizon of 90 days Incannex Healthcare Ltd is expected to under-perform the Curative Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, Incannex Healthcare Ltd is 2.61 times less risky than Curative Biotechnology. The stock trades about -0.17 of its potential returns per unit of risk. The Curative Biotechnology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1.39  in Curative Biotechnology on December 21, 2024 and sell it today you would earn a total of  0.14  from holding Curative Biotechnology or generate 10.07% return on investment over 90 days.

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

Incannex Healthcare Ltd  vs.  Curative Biotechnology

Incannex Healthcare

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Curative Biotechnology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Curative Biotechnology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental drivers, Curative Biotechnology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Incannex Healthcare and Curative Biotechnology

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

The idea behind Incannex Healthcare Ltd and Curative Biotechnology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.