Correlation Between PCI Biotech and Kitron ASA
Can any of the company-specific risk be diversified away by investing in both PCI Biotech and Kitron ASA 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 PCI Biotech and Kitron ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PCI Biotech Holding and Kitron ASA, you can compare the effects of market volatilities on PCI Biotech and Kitron ASA 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 PCI Biotech with a short position of Kitron ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCI Biotech and Kitron ASA.
Diversification Opportunities for PCI Biotech and Kitron ASA
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PCI and Kitron is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding PCI Biotech Holding and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron ASA and PCI Biotech 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 PCI Biotech Holding are associated (or correlated) with Kitron ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kitron ASA has no effect on the direction of PCI Biotech i.e., PCI Biotech and Kitron ASA go up and down completely randomly.
Pair Corralation between PCI Biotech and Kitron ASA
Assuming the 90 days trading horizon PCI Biotech Holding is expected to generate 3.62 times more return on investment than Kitron ASA. However, PCI Biotech is 3.62 times more volatile than Kitron ASA. It trades about 0.02 of its potential returns per unit of risk. Kitron ASA is currently generating about -0.02 per unit of risk. If you would invest 196.00 in PCI Biotech Holding on September 4, 2024 and sell it today you would lose (56.00) from holding PCI Biotech Holding or give up 28.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PCI Biotech Holding vs. Kitron ASA
Performance |
| Timeline |
| PCI Biotech Holding |
| Kitron ASA |
PCI Biotech and Kitron ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PCI Biotech and Kitron ASA
The main advantage of trading using opposite PCI Biotech and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCI Biotech position performs unexpectedly, Kitron ASA 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 Kitron ASA will offset losses from the drop in Kitron ASA's long position.| PCI Biotech vs. Nordic Mining ASA | PCI Biotech vs. BW Offshore | PCI Biotech vs. Nidaros Sparebank | PCI Biotech vs. Aasen Sparebank |
| Kitron ASA vs. Elliptic Laboratories AS | Kitron ASA vs. Kongsberg Automotive Holding | Kitron ASA vs. REC Silicon ASA | Kitron ASA vs. Elkem 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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