Correlation Between Procaps Group and Incannex Healthcare
Can any of the company-specific risk be diversified away by investing in both Procaps Group and Incannex Healthcare 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 Procaps Group and Incannex Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procaps Group SA and Incannex Healthcare Ltd, you can compare the effects of market volatilities on Procaps Group and Incannex Healthcare 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 Procaps Group with a short position of Incannex Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procaps Group and Incannex Healthcare.
Diversification Opportunities for Procaps Group and Incannex Healthcare
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Procaps and Incannex is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Procaps Group SA and Incannex Healthcare Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incannex Healthcare and Procaps Group 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 Procaps Group SA are associated (or correlated) with Incannex Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incannex Healthcare has no effect on the direction of Procaps Group i.e., Procaps Group and Incannex Healthcare go up and down completely randomly.
Pair Corralation between Procaps Group and Incannex Healthcare
Given the investment horizon of 90 days Procaps Group is expected to generate 14.99 times less return on investment than Incannex Healthcare. But when comparing it to its historical volatility, Procaps Group SA is 4.15 times less risky than Incannex Healthcare. It trades about 0.01 of its potential returns per unit of risk. Incannex Healthcare Ltd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 302.00 in Incannex Healthcare Ltd on November 5, 2024 and sell it today you would lose (135.00) from holding Incannex Healthcare Ltd or give up 44.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procaps Group SA vs. Incannex Healthcare Ltd
Performance |
| Timeline |
| Procaps Group SA |
| Incannex Healthcare |
Procaps Group and Incannex Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procaps Group and Incannex Healthcare
The main advantage of trading using opposite Procaps Group and Incannex Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procaps Group position performs unexpectedly, Incannex Healthcare 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 Incannex Healthcare will offset losses from the drop in Incannex Healthcare's long position.| Procaps Group vs. Phibro Animal Health | Procaps Group vs. Delta 9 Cannabis | Procaps Group vs. City View Green | Procaps Group vs. Benchmark Botanics |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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