Correlation Between Krystal Biotech and Im Cannabis

Can any of the company-specific risk be diversified away by investing in both Krystal Biotech and Im Cannabis 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 Krystal Biotech and Im Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Krystal Biotech and Im Cannabis

0.34

Correlation Coefficient

Krystal Biotech  Im Cannabis

Weak diversification

The 3 months correlation between Krystal and IMCC is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Krystal Biotech and Im Cannabis Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Im Cannabis Corp and Krystal Biotech 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 Krystal Biotech are associated (or correlated) with Im Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Im Cannabis Corp has no effect on the direction of Krystal Biotech i.e., Krystal Biotech and Im Cannabis go up and down completely randomly.

Pair Corralation between Krystal Biotech and Im Cannabis

Given the investment horizon of 90 days Krystal Biotech is expected to generate 3.01 times less return on investment than Im Cannabis. But when comparing it to its historical volatility, Krystal Biotech is 2.62 times less risky than Im Cannabis. It trades about 0.04 of its potential returns per unit of risk. Im Cannabis Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  194.00  in Im Cannabis Corp on October 24, 2024 and sell it today you would earn a total of  43.48  from holding Im Cannabis Corp or generate 22.41% return on investment over 90 days.

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

Krystal Biotech  vs.  Im Cannabis Corp

Krystal Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Krystal Biotech 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Im Cannabis Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Im Cannabis Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Im Cannabis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Krystal Biotech and Im Cannabis

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

The idea behind Krystal Biotech and Im Cannabis 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.