Correlation Between Incannex Healthcare and Intracellular

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

Diversification Opportunities for Incannex Healthcare and Intracellular

0.69

Correlation Coefficient

Incannex Healthcare  Intracellular

Poor diversification

The 3 months correlation between Incannex and Intracellular is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Incannex Healthcare Ltd and Intracellular Th in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intracellular Th 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 Intracellular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intracellular Th has no effect on the direction of Incannex Healthcare i.e., Incannex Healthcare and Intracellular go up and down completely randomly.

Pair Corralation between Incannex Healthcare and Intracellular

Given the investment horizon of 90 days Incannex Healthcare is expected to generate 1.12 times less return on investment than Intracellular. In addition to that, Incannex Healthcare is 2.72 times more volatile than Intracellular Th. It trades about 0.04 of its total potential returns per unit of risk. Intracellular Th is currently generating about 0.13 per unit of volatility. If you would invest  7,300  in Intracellular Th on August 31, 2024 and sell it today you would earn a total of  1,265  from holding Intracellular Th or generate 17.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Incannex Healthcare Ltd  vs.  Intracellular Th

Incannex Healthcare

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Incannex Healthcare Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical indicators, Incannex Healthcare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Intracellular Th

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intracellular Th are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Intracellular demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Incannex Healthcare and Intracellular

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

The idea behind Incannex Healthcare Ltd and Intracellular Th 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.