Correlation Between Trinity Biotech and OncoCyte Corp
Can any of the company-specific risk be diversified away by investing in both Trinity Biotech and OncoCyte Corp 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 Trinity Biotech and OncoCyte Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trinity Biotech plc and OncoCyte Corp, you can compare the effects of market volatilities on Trinity Biotech and OncoCyte Corp 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 Trinity Biotech with a short position of OncoCyte Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trinity Biotech and OncoCyte Corp.
Diversification Opportunities for Trinity Biotech and OncoCyte Corp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Trinity and OncoCyte is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Trinity Biotech plc and OncoCyte Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OncoCyte Corp and Trinity 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 Trinity Biotech plc are associated (or correlated) with OncoCyte Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OncoCyte Corp has no effect on the direction of Trinity Biotech i.e., Trinity Biotech and OncoCyte Corp go up and down completely randomly.
Pair Corralation between Trinity Biotech and OncoCyte Corp
Given the investment horizon of 90 days Trinity Biotech plc is expected to under-perform the OncoCyte Corp. In addition to that, Trinity Biotech is 1.51 times more volatile than OncoCyte Corp. It trades about -0.38 of its total potential returns per unit of risk. OncoCyte Corp is currently generating about -0.24 per unit of volatility. If you would invest 263.00 in OncoCyte Corp on September 18, 2024 and sell it today you would lose (42.00) from holding OncoCyte Corp or give up 15.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trinity Biotech plc vs. OncoCyte Corp
Performance |
| Timeline |
| Trinity Biotech plc |
| OncoCyte Corp |
Trinity Biotech and OncoCyte Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trinity Biotech and OncoCyte Corp
The main advantage of trading using opposite Trinity Biotech and OncoCyte Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trinity Biotech position performs unexpectedly, OncoCyte Corp 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 OncoCyte Corp will offset losses from the drop in OncoCyte Corp's long position.The idea behind Trinity Biotech plc and OncoCyte Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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