Correlation Between Inmune Bio and Croda Intl

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

Diversification Opportunities for Inmune Bio and Croda Intl

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Inmune and Croda is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Inmune Bio and Croda Intl Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Croda Intl Plc and Inmune Bio 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 Inmune Bio are associated (or correlated) with Croda Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Croda Intl Plc has no effect on the direction of Inmune Bio i.e., Inmune Bio and Croda Intl go up and down completely randomly.

Pair Corralation between Inmune Bio and Croda Intl

Given the investment horizon of 90 days Inmune Bio is expected to generate 3.04 times more return on investment than Croda Intl. However, Inmune Bio is 3.04 times more volatile than Croda Intl Plc. It trades about 0.02 of its potential returns per unit of risk. Croda Intl Plc is currently generating about 0.02 per unit of risk. If you would invest  892.00  in Inmune Bio on August 29, 2022 and sell it today you would lose (186.00)  from holding Inmune Bio or give up 20.85% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Inmune Bio  vs.  Croda Intl Plc

 Performance (%) 
       Timeline  
Inmune Bio 
Inmune Performance
0 of 100
Over the last 90 days Inmune Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Inmune Price Channel

Croda Intl Plc 
Croda Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Croda Intl Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly sluggish technical indicators, Croda Intl may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Croda Price Channel

Inmune Bio and Croda Intl Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Inmune Bio and Croda Intl

The main advantage of trading using opposite Inmune Bio and Croda Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inmune Bio position performs unexpectedly, Croda Intl 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 Croda Intl will offset losses from the drop in Croda Intl's long position.
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The idea behind Inmune Bio and Croda Intl Plc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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