Correlation Between Incannex Healthcare and Supernus Pharmaceuticals

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

Diversification Opportunities for Incannex Healthcare and Supernus Pharmaceuticals

0.3

Correlation Coefficient

Incannex Healthcare  Supernus Pharmaceuticals

Weak diversification

The 3 months correlation between Incannex and Supernus is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Incannex Healthcare Ltd and Supernus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supernus Pharmaceuticals 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 Supernus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supernus Pharmaceuticals has no effect on the direction of Incannex Healthcare i.e., Incannex Healthcare and Supernus Pharmaceuticals go up and down completely randomly.

Pair Corralation between Incannex Healthcare and Supernus Pharmaceuticals

Given the investment horizon of 90 days Incannex Healthcare Ltd is expected to generate 15.22 times more return on investment than Supernus Pharmaceuticals. However, Incannex Healthcare is 15.22 times more volatile than Supernus Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. Supernus Pharmaceuticals is currently generating about 0.01 per unit of risk. If you would invest  288.00  in Incannex Healthcare Ltd on September 15, 2024 and sell it today you would lose (102.00) from holding Incannex Healthcare Ltd or give up 35.42% of portfolio value over 90 days.

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

Incannex Healthcare Ltd  vs.  Supernus Pharmaceuticals

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.

Supernus Pharmaceuticals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Supernus Pharmaceuticals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Supernus Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Incannex Healthcare and Supernus Pharmaceuticals

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

The idea behind Incannex Healthcare Ltd and Supernus Pharmaceuticals 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.