Correlation Between Exagen and InMed Pharmaceuticals

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

By analyzing existing cross correlation between Exagen Inc and InMed Pharmaceuticals, you can compare the effects of market volatilities on Exagen and InMed Pharmaceuticals 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 Exagen with a short position of InMed Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exagen and InMed Pharmaceuticals.

Diversification Opportunities for Exagen and InMed Pharmaceuticals

-0.12

Correlation Coefficient

Exagen  InMed Pharmaceuticals

Good diversification

The 3 months correlation between Exagen and InMed is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Exagen Inc and InMed Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InMed Pharmaceuticals and Exagen 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 Exagen Inc are associated (or correlated) with InMed Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InMed Pharmaceuticals has no effect on the direction of Exagen i.e., Exagen and InMed Pharmaceuticals go up and down completely randomly.

Pair Corralation between Exagen and InMed Pharmaceuticals

Considering the 90-day investment horizon Exagen Inc is expected to under-perform the InMed Pharmaceuticals. In addition to that, Exagen is 1.4 times more volatile than InMed Pharmaceuticals. It trades about -0.17 of its total potential returns per unit of risk. InMed Pharmaceuticals is currently generating about 0.08 per unit of volatility. If you would invest  442.00  in InMed Pharmaceuticals on October 4, 2024 and sell it today you would earn a total of  32.00  from holding InMed Pharmaceuticals or generate 7.24% return on investment over 90 days.

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

Exagen Inc  vs.  InMed Pharmaceuticals

Exagen Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Exagen Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Exagen displayed solid returns over the last few months and may actually be approaching a breakup point.

InMed Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Exagen and InMed Pharmaceuticals

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

The idea behind Exagen Inc and InMed Pharmaceuticals 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.