Correlation Between Sparebank and PCI Biotech
Can any of the company-specific risk be diversified away by investing in both Sparebank 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 Sparebank and PCI Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebank 1 SMN and PCI Biotech Holding, you can compare the effects of market volatilities on Sparebank 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 Sparebank with a short position of PCI Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and PCI Biotech.
Diversification Opportunities for Sparebank and PCI Biotech
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sparebank and PCI is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SMN 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 Sparebank 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 Sparebank 1 SMN 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 Sparebank i.e., Sparebank and PCI Biotech go up and down completely randomly.
Pair Corralation between Sparebank and PCI Biotech
Assuming the 90 days trading horizon Sparebank is expected to generate 1.58 times less return on investment than PCI Biotech. But when comparing it to its historical volatility, Sparebank 1 SMN is 8.19 times less risky than PCI Biotech. It trades about 0.09 of its potential returns per unit of risk. PCI Biotech Holding is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 182.00 in PCI Biotech Holding on September 3, 2024 and sell it today you would lose (32.00) from holding PCI Biotech Holding or give up 17.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 SMN vs. PCI Biotech Holding
Performance |
| Timeline |
| Sparebank 1 SMN |
| PCI Biotech Holding |
Sparebank and PCI Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and PCI Biotech
The main advantage of trading using opposite Sparebank and PCI Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank 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.| Sparebank vs. Sparebank 1 Nord Norge | Sparebank vs. Sparebanken Vest | Sparebank vs. Storebrand ASA | Sparebank vs. DnB ASA |
| PCI Biotech vs. 5Th Planet Games | PCI Biotech vs. Arcticzymes Technologies ASA | PCI Biotech vs. Instabank ASA | PCI Biotech vs. Clean Seas Seafood |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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