Correlation Between Indoor Harvest and Lowell Farms

Can any of the company-specific risk be diversified away by investing in both Indoor Harvest and Lowell Farms 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 Lowell Farms 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 Lowell Farms, you can compare the effects of market volatilities on Indoor Harvest and Lowell Farms 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 Lowell Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indoor Harvest and Lowell Farms.

Diversification Opportunities for Indoor Harvest and Lowell Farms

0.0

Correlation Coefficient

Indoor Harvest  Lowell Farms

Pay attention - limited upside

The 3 months correlation between Indoor and Lowell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Indoor Harvest Corp and Lowell Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowell Farms 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 Lowell Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowell Farms has no effect on the direction of Indoor Harvest i.e., Indoor Harvest and Lowell Farms go up and down completely randomly.

Pair Corralation between Indoor Harvest and Lowell Farms

If you would invest  1.50  in Lowell Farms on September 3, 2024 and sell it today you would earn a total of  0.10  from holding Lowell Farms or generate 6.67% return on investment over 90 days.

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

Indoor Harvest Corp  vs.  Lowell Farms

Indoor Harvest Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indoor Harvest Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Indoor Harvest is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Lowell Farms

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lowell Farms are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, Lowell Farms reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indoor Harvest and Lowell Farms

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

The idea behind Indoor Harvest Corp and Lowell Farms 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.