Correlation Between Intercure and Human Xtensions

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

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

Diversification Opportunities for Intercure and Human Xtensions

0.88

Correlation Coefficient

Intercure  Human Xtensions

Very poor diversification

The 3 months correlation between Intercure and Human is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Intercure and Human Xtensions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Human Xtensions and Intercure 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 Intercure are associated (or correlated) with Human Xtensions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Human Xtensions has no effect on the direction of Intercure i.e., Intercure and Human Xtensions go up and down completely randomly.

Pair Corralation between Intercure and Human Xtensions

Assuming the 90 days trading horizon Intercure is expected to generate 0.86 times more return on investment than Human Xtensions. However, Intercure is 1.16 times less risky than Human Xtensions. It trades about -0.03 of its potential returns per unit of risk. Human Xtensions is currently generating about -0.18 per unit of risk. If you would invest  69,600  in Intercure on September 28, 2024 and sell it today you would lose (8,100) from holding Intercure or give up 11.64% of portfolio value over 90 days.

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

Intercure  vs.  Human Xtensions

Intercure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intercure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Human Xtensions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Human Xtensions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Intercure and Human Xtensions

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

The idea behind Intercure and Human Xtensions 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.