Correlation Between Inmed Pharmaceuticals and Bellus Health

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Can any of the company-specific risk be diversified away by investing in both Inmed Pharmaceuticals and Bellus Health 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 Inmed Pharmaceuticals and Bellus Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inmed Pharmaceuticals and Bellus Health, you can compare the effects of market volatilities on Inmed Pharmaceuticals and Bellus Health 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 Inmed Pharmaceuticals with a short position of Bellus Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inmed Pharmaceuticals and Bellus Health.

Diversification Opportunities for Inmed Pharmaceuticals and Bellus Health

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Inmed and Bellus is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Inmed Pharmaceuticals and Bellus Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellus Health and Inmed Pharmaceuticals 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 Inmed Pharmaceuticals are associated (or correlated) with Bellus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellus Health has no effect on the direction of Inmed Pharmaceuticals i.e., Inmed Pharmaceuticals and Bellus Health go up and down completely randomly.

Pair Corralation between Inmed Pharmaceuticals and Bellus Health

Considering the 90-day investment horizon Inmed Pharmaceuticals is expected to under-perform the Bellus Health. In addition to that, Inmed Pharmaceuticals is 4.34 times more volatile than Bellus Health. It trades about -0.01 of its total potential returns per unit of risk. Bellus Health is currently generating about 0.1 per unit of volatility. If you would invest  940.00  in Bellus Health on June 30, 2022 and sell it today you would earn a total of  135.00  from holding Bellus Health or generate 14.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Inmed Pharmaceuticals  vs.  Bellus Health

 Performance (%) 
       Timeline  
Inmed Pharmaceuticals 
Inmed Performance
0 of 100
Over the last 90 days Inmed Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in October 2022. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

Inmed Price Channel

Bellus Health 
Bellus Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bellus Health are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, Bellus Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bellus Price Channel

Inmed Pharmaceuticals and Bellus Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Inmed Pharmaceuticals and Bellus Health

The main advantage of trading using opposite Inmed Pharmaceuticals and Bellus Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inmed Pharmaceuticals position performs unexpectedly, Bellus Health 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 Bellus Health will offset losses from the drop in Bellus Health's long position.
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The idea behind Inmed Pharmaceuticals and Bellus Health 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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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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