Correlation Between Incannex Healthcare and Medicure

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

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

Diversification Opportunities for Incannex Healthcare and Medicure

-0.39

Correlation Coefficient

Incannex Healthcare  Medicure

Very good diversification

The 3 months correlation between Incannex and Medicure is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Incannex Healthcare Ltd and Medicure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicure and Incannex Healthcare 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 Incannex Healthcare Ltd are associated (or correlated) with Medicure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicure has no effect on the direction of Incannex Healthcare i.e., Incannex Healthcare and Medicure go up and down completely randomly.

Pair Corralation between Incannex Healthcare and Medicure

Given the investment horizon of 90 days Incannex Healthcare Ltd is expected to generate 1.3 times more return on investment than Medicure. However, Incannex Healthcare is 1.3 times more volatile than Medicure. It trades about 0.05 of its potential returns per unit of risk. Medicure is currently generating about -0.03 per unit of risk. If you would invest  174.00  in Incannex Healthcare Ltd on September 15, 2024 and sell it today you would earn a total of  12.00  from holding Incannex Healthcare Ltd or generate 6.9% return on investment over 90 days.

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

Incannex Healthcare Ltd  vs.  Medicure

Incannex Healthcare

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Incannex Healthcare Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical indicators, Incannex Healthcare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Medicure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medicure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Incannex Healthcare and Medicure

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

The idea behind Incannex Healthcare Ltd and Medicure 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.