Correlation Between Equinor ASA and PCI Biotech
Can any of the company-specific risk be diversified away by investing in both Equinor ASA and PCI Biotech 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 Equinor ASA and PCI Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equinor ASA and PCI Biotech Holding, you can compare the effects of market volatilities on Equinor ASA and PCI Biotech 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 Equinor ASA with a short position of PCI Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equinor ASA and PCI Biotech.
Diversification Opportunities for Equinor ASA and PCI Biotech
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Equinor and PCI is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Equinor ASA and PCI Biotech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCI Biotech Holding and Equinor ASA 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 Equinor ASA are associated (or correlated) with PCI Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCI Biotech Holding has no effect on the direction of Equinor ASA i.e., Equinor ASA and PCI Biotech go up and down completely randomly.
Pair Corralation between Equinor ASA and PCI Biotech
Assuming the 90 days trading horizon Equinor ASA is expected to under-perform the PCI Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Equinor ASA is 4.08 times less risky than PCI Biotech. The stock trades about -0.08 of its potential returns per unit of risk. The PCI Biotech Holding is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 122.00 in PCI Biotech Holding on December 1, 2024 and sell it today you would earn a total of 18.00 from holding PCI Biotech Holding or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equinor ASA vs. PCI Biotech Holding
Performance |
| Timeline |
| Equinor ASA |
| PCI Biotech Holding |
Equinor ASA and PCI Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equinor ASA and PCI Biotech
The main advantage of trading using opposite Equinor ASA and PCI Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinor ASA position performs unexpectedly, PCI Biotech 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 PCI Biotech will offset losses from the drop in PCI Biotech's long position.| Equinor ASA vs. DnB ASA | Equinor ASA vs. Mowi ASA | Equinor ASA vs. Yara International ASA | Equinor ASA vs. Telenor ASA |
| PCI Biotech vs. Proximar Seafood AS | PCI Biotech vs. Skue Sparebank | PCI Biotech vs. Awilco Drilling PLC | PCI Biotech vs. Nordic Semiconductor ASA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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