Correlation Between Vulcan International and InMed Pharmaceuticals

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

Diversification Opportunities for Vulcan International and InMed Pharmaceuticals

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Vulcan and InMed is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan International and InMed Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InMed Pharmaceuticals and Vulcan International 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 Vulcan International are associated (or correlated) with InMed Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InMed Pharmaceuticals has no effect on the direction of Vulcan International i.e., Vulcan International and InMed Pharmaceuticals go up and down completely randomly.

Pair Corralation between Vulcan International and InMed Pharmaceuticals

If you would invest  257.00  in InMed Pharmaceuticals on September 8, 2022 and sell it today you would lose (24.00)  from holding InMed Pharmaceuticals or give up 9.34% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Vulcan International  vs.  InMed Pharmaceuticals

 Performance (%) 
       Timeline  
Vulcan International 
Vulcan Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish essential indicators, Vulcan International sustained solid returns over the last few months and may actually be approaching a breakup point.

Vulcan Price Channel

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 January 2023. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

InMed Price Channel

Vulcan International and InMed Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vulcan International and InMed Pharmaceuticals

The main advantage of trading using opposite Vulcan International and InMed Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan International position performs unexpectedly, InMed 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 InMed Pharmaceuticals will offset losses from the drop in InMed Pharmaceuticals' long position.
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The idea behind Vulcan International and InMed 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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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 Global Correlations module to find global opportunities by holding instruments from different markets.

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