Correlation Between PCI Biotech and Navamedic ASA
Can any of the company-specific risk be diversified away by investing in both PCI Biotech and Navamedic 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 Navamedic 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 Navamedic ASA, you can compare the effects of market volatilities on PCI Biotech and Navamedic 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 Navamedic ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCI Biotech and Navamedic ASA.
Diversification Opportunities for PCI Biotech and Navamedic ASA
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PCI and Navamedic is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PCI Biotech Holding and Navamedic ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navamedic 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 Navamedic ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navamedic ASA has no effect on the direction of PCI Biotech i.e., PCI Biotech and Navamedic ASA go up and down completely randomly.
Pair Corralation between PCI Biotech and Navamedic ASA
Assuming the 90 days trading horizon PCI Biotech Holding is expected to generate 3.35 times more return on investment than Navamedic ASA. However, PCI Biotech is 3.35 times more volatile than Navamedic ASA. It trades about 0.02 of its potential returns per unit of risk. Navamedic ASA is currently generating about -0.01 per unit of risk. If you would invest 246.00 in PCI Biotech Holding on September 2, 2024 and sell it today you would lose (96.00) from holding PCI Biotech Holding or give up 39.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PCI Biotech Holding vs. Navamedic ASA
Performance |
| Timeline |
| PCI Biotech Holding |
| Navamedic ASA |
PCI Biotech and Navamedic ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PCI Biotech and Navamedic ASA
The main advantage of trading using opposite PCI Biotech and Navamedic ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCI Biotech position performs unexpectedly, Navamedic 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 Navamedic ASA will offset losses from the drop in Navamedic ASA's long position.| PCI Biotech vs. DnB ASA | PCI Biotech vs. Sparebank 1 SMN | PCI Biotech vs. Norsk Hydro ASA | PCI Biotech vs. Equinor ASA |
| Navamedic ASA vs. DnB ASA | Navamedic ASA vs. Sparebank 1 SMN | Navamedic ASA vs. Norsk Hydro ASA | Navamedic ASA vs. Equinor 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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