Correlation Between Photocure and Circa Group
Can any of the company-specific risk be diversified away by investing in both Photocure and Circa Group 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 Photocure and Circa Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Photocure and Circa Group AS, you can compare the effects of market volatilities on Photocure and Circa Group 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 Photocure with a short position of Circa Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Photocure and Circa Group.
Diversification Opportunities for Photocure and Circa Group
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Photocure and Circa is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Photocure and Circa Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Circa Group AS and Photocure 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 Photocure are associated (or correlated) with Circa Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Circa Group AS has no effect on the direction of Photocure i.e., Photocure and Circa Group go up and down completely randomly.
Pair Corralation between Photocure and Circa Group
Assuming the 90 days trading horizon Photocure is expected to generate 0.27 times more return on investment than Circa Group. However, Photocure is 3.7 times less risky than Circa Group. It trades about -0.02 of its potential returns per unit of risk. Circa Group AS is currently generating about -0.04 per unit of risk. If you would invest 6,000 in Photocure on September 3, 2024 and sell it today you would lose (1,105) from holding Photocure or give up 18.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Photocure vs. Circa Group AS
Performance |
| Timeline |
| Photocure |
| Circa Group AS |
Photocure and Circa Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Photocure and Circa Group
The main advantage of trading using opposite Photocure and Circa Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Photocure position performs unexpectedly, Circa Group 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 Circa Group will offset losses from the drop in Circa Group's long position.| Photocure vs. Aurskog Sparebank | Photocure vs. Skue Sparebank | Photocure vs. Awilco Drilling PLC | Photocure vs. Polaris Media |
| Circa Group vs. Arcticzymes Technologies ASA | Circa Group vs. Napatech AS | Circa Group vs. Waste Plastic Upcycling | Circa Group vs. Nordic Mining 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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