Correlation Between Napatech and PCI Biotech
Can any of the company-specific risk be diversified away by investing in both Napatech 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 Napatech and PCI Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Napatech AS and PCI Biotech Holding, you can compare the effects of market volatilities on Napatech 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 Napatech with a short position of PCI Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Napatech and PCI Biotech.
Diversification Opportunities for Napatech and PCI Biotech
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Napatech and PCI is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Napatech AS 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 Napatech 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 Napatech AS 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 Napatech i.e., Napatech and PCI Biotech go up and down completely randomly.
Pair Corralation between Napatech and PCI Biotech
Assuming the 90 days trading horizon Napatech is expected to generate 1.63 times less return on investment than PCI Biotech. But when comparing it to its historical volatility, Napatech AS is 2.37 times less risky than PCI Biotech. It trades about 0.05 of its potential returns per unit of risk. PCI Biotech Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 210.00 in PCI Biotech Holding on August 28, 2024 and sell it today you would lose (20.00) from holding PCI Biotech Holding or give up 9.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Napatech AS vs. PCI Biotech Holding
Performance |
| Timeline |
| Napatech AS |
| PCI Biotech Holding |
Napatech and PCI Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Napatech and PCI Biotech
The main advantage of trading using opposite Napatech and PCI Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Napatech 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.| Napatech vs. Idex ASA | Napatech vs. Next Biometrics Group | Napatech vs. Polight ASA | Napatech vs. Kitron ASA |
| PCI Biotech vs. DnB ASA | PCI Biotech vs. Storebrand ASA | PCI Biotech vs. Sparebank 1 SR | PCI Biotech vs. Telenor 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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