Correlation Between Photocure and Techstep ASA
Can any of the company-specific risk be diversified away by investing in both Photocure and Techstep 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 Photocure and Techstep ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Photocure and Techstep ASA, you can compare the effects of market volatilities on Photocure and Techstep 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 Photocure with a short position of Techstep ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Photocure and Techstep ASA.
Diversification Opportunities for Photocure and Techstep ASA
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Photocure and Techstep is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Photocure and Techstep ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techstep ASA 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 Techstep ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techstep ASA has no effect on the direction of Photocure i.e., Photocure and Techstep ASA go up and down completely randomly.
Pair Corralation between Photocure and Techstep ASA
Assuming the 90 days trading horizon Photocure is expected to under-perform the Techstep ASA. But the stock apears to be less risky and, when comparing its historical volatility, Photocure is 1.56 times less risky than Techstep ASA. The stock trades about -0.05 of its potential returns per unit of risk. The Techstep ASA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,200 in Techstep ASA on September 3, 2024 and sell it today you would earn a total of 10.00 from holding Techstep ASA or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Photocure vs. Techstep ASA
Performance |
| Timeline |
| Photocure |
| Techstep ASA |
Photocure and Techstep ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Photocure and Techstep ASA
The main advantage of trading using opposite Photocure and Techstep ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Photocure position performs unexpectedly, Techstep 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 Techstep ASA will offset losses from the drop in Techstep ASA's long position.| Photocure vs. Aurskog Sparebank | Photocure vs. Skue Sparebank | Photocure vs. Awilco Drilling PLC | Photocure vs. Polaris Media |
| Techstep ASA vs. Next Biometrics Group | Techstep ASA vs. Goodtech | Techstep ASA vs. Elkem ASA | Techstep ASA vs. Integrated Wind Solutions |
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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