Correlation Between Arctic Bioscience and Photocure
Can any of the company-specific risk be diversified away by investing in both Arctic Bioscience and Photocure 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 Arctic Bioscience and Photocure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arctic Bioscience AS and Photocure, you can compare the effects of market volatilities on Arctic Bioscience and Photocure 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 Arctic Bioscience with a short position of Photocure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Bioscience and Photocure.
Diversification Opportunities for Arctic Bioscience and Photocure
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Arctic and Photocure is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Bioscience AS and Photocure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photocure and Arctic Bioscience 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 Arctic Bioscience AS are associated (or correlated) with Photocure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photocure has no effect on the direction of Arctic Bioscience i.e., Arctic Bioscience and Photocure go up and down completely randomly.
Pair Corralation between Arctic Bioscience and Photocure
Assuming the 90 days trading horizon Arctic Bioscience is expected to generate 4.92 times less return on investment than Photocure. In addition to that, Arctic Bioscience is 2.58 times more volatile than Photocure. It trades about 0.01 of its total potential returns per unit of risk. Photocure is currently generating about 0.12 per unit of volatility. If you would invest 5,390 in Photocure on September 12, 2024 and sell it today you would earn a total of 310.00 from holding Photocure or generate 5.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arctic Bioscience AS vs. Photocure
Performance |
| Timeline |
| Arctic Bioscience |
| Photocure |
Arctic Bioscience and Photocure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arctic Bioscience and Photocure
The main advantage of trading using opposite Arctic Bioscience and Photocure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arctic Bioscience position performs unexpectedly, Photocure 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 Photocure will offset losses from the drop in Photocure's long position.| Arctic Bioscience vs. Photocure | Arctic Bioscience vs. Kitron ASA | Arctic Bioscience vs. Kongsberg Gruppen ASA | Arctic Bioscience vs. Napatech AS |
| Photocure vs. Napatech AS | Photocure vs. Nidaros Sparebank | Photocure vs. Vow Green Metals | Photocure vs. Odfjell Drilling |
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 the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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