Correlation Between Idex ASA and Photocure
Can any of the company-specific risk be diversified away by investing in both Idex ASA and Photocure 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 Idex ASA and Photocure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Idex ASA and Photocure, you can compare the effects of market volatilities on Idex ASA and Photocure 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 Idex ASA with a short position of Photocure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Idex ASA and Photocure.
Diversification Opportunities for Idex ASA and Photocure
Modest diversification
The 3 months correlation between Idex and Photocure is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Idex ASA and Photocure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photocure and Idex ASA 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 Idex ASA are associated (or correlated) with Photocure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photocure has no effect on the direction of Idex ASA i.e., Idex ASA and Photocure go up and down completely randomly.
Pair Corralation between Idex ASA and Photocure
Assuming the 90 days trading horizon Idex ASA is expected to under-perform the Photocure. In addition to that, Idex ASA is 1.77 times more volatile than Photocure. It trades about -0.1 of its total potential returns per unit of risk. Photocure is currently generating about -0.03 per unit of volatility. If you would invest 10,810 in Photocure on September 6, 2024 and sell it today you would lose (5,770) from holding Photocure or give up 53.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Idex ASA vs. Photocure
Performance |
Timeline |
Idex ASA |
Photocure |
Idex ASA and Photocure Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Idex ASA and Photocure
The main advantage of trading using opposite Idex ASA and Photocure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Idex ASA position performs unexpectedly, Photocure 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 Photocure will offset losses from the drop in Photocure's long position.Idex ASA vs. Next Biometrics Group | Idex ASA vs. Kongsberg Automotive Holding | Idex ASA vs. Bergenbio ASA | Idex ASA vs. XXL ASA |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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