Correlation Between Indoor Harvest and Hempfusion Wellness
Can any of the company-specific risk be diversified away by investing in both Indoor Harvest and Hempfusion Wellness 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 Indoor Harvest and Hempfusion Wellness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indoor Harvest Corp and Hempfusion Wellness, you can compare the effects of market volatilities on Indoor Harvest and Hempfusion Wellness 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 Indoor Harvest with a short position of Hempfusion Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indoor Harvest and Hempfusion Wellness.
Diversification Opportunities for Indoor Harvest and Hempfusion Wellness
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Indoor and Hempfusion is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Indoor Harvest Corp and Hempfusion Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hempfusion Wellness and Indoor Harvest 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 Indoor Harvest Corp are associated (or correlated) with Hempfusion Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hempfusion Wellness has no effect on the direction of Indoor Harvest i.e., Indoor Harvest and Hempfusion Wellness go up and down completely randomly.
Pair Corralation between Indoor Harvest and Hempfusion Wellness
Given the investment horizon of 90 days Indoor Harvest Corp is expected to under-perform the Hempfusion Wellness. But the pink sheet apears to be less risky and, when comparing its historical volatility, Indoor Harvest Corp is 5.35 times less risky than Hempfusion Wellness. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Hempfusion Wellness is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.02 in Hempfusion Wellness on August 26, 2024 and sell it today you would lose (0.01) from holding Hempfusion Wellness or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indoor Harvest Corp vs. Hempfusion Wellness
Performance |
| Timeline |
| Indoor Harvest Corp |
| Hempfusion Wellness |
Indoor Harvest and Hempfusion Wellness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indoor Harvest and Hempfusion Wellness
The main advantage of trading using opposite Indoor Harvest and Hempfusion Wellness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indoor Harvest position performs unexpectedly, Hempfusion Wellness 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 Hempfusion Wellness will offset losses from the drop in Hempfusion Wellness' long position.| Indoor Harvest vs. Green Cures Botanical | Indoor Harvest vs. Cann American Corp | Indoor Harvest vs. Rimrock Gold Corp | Indoor Harvest vs. Galexxy Holdings |
| Hempfusion Wellness vs. Green Cures Botanical | Hempfusion Wellness vs. Galexxy Holdings | Hempfusion Wellness vs. Indoor Harvest Corp | Hempfusion Wellness vs. Speakeasy Cannabis Club |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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