Correlation Between Incannex Healthcare and Regencell Bioscience

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

Diversification Opportunities for Incannex Healthcare and Regencell Bioscience

0.22

Correlation Coefficient

Incannex Healthcare  Regencell Bioscience

Modest diversification

The 3 months correlation between Incannex and Regencell is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Incannex Healthcare Ltd and Regencell Bioscience Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regencell Bioscience 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 Regencell Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regencell Bioscience has no effect on the direction of Incannex Healthcare i.e., Incannex Healthcare and Regencell Bioscience go up and down completely randomly.

Pair Corralation between Incannex Healthcare and Regencell Bioscience

Given the investment horizon of 90 days Incannex Healthcare Ltd is expected to under-perform the Regencell Bioscience. But the stock apears to be less risky and, when comparing its historical volatility, Incannex Healthcare Ltd is 1.02 times less risky than Regencell Bioscience. The stock trades about -0.11 of its potential returns per unit of risk. The Regencell Bioscience Holdings is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  691.00  in Regencell Bioscience Holdings on August 31, 2024 and sell it today you would lose (59.00) from holding Regencell Bioscience Holdings or give up 8.54% of portfolio value over 90 days.

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

Incannex Healthcare Ltd  vs.  Regencell Bioscience Holdings

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 unfluctuating technical indicators, Incannex Healthcare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Regencell Bioscience

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Regencell Bioscience Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Regencell Bioscience exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Incannex Healthcare and Regencell Bioscience

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

The idea behind Incannex Healthcare Ltd and Regencell Bioscience 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 CEOs Directory module to screen CEOs from public companies around the world.