Correlation Between Integral Acquisition and Photocure ASA

Can any of the company-specific risk be diversified away by investing in both Integral Acquisition and Photocure 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 Integral Acquisition and Photocure ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Integral Acquisition 1 and Photocure ASA, you can compare the effects of market volatilities on Integral Acquisition and Photocure 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 Integral Acquisition with a short position of Photocure ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integral Acquisition and Photocure ASA.

Diversification Opportunities for Integral Acquisition and Photocure ASA

-0.36

Correlation Coefficient

Integral Acquisition  Photocure ASA

Very good diversification

The 3 months correlation between Integral and Photocure is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Integral Acquisition 1 and Photocure ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photocure ASA and Integral Acquisition 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 Integral Acquisition 1 are associated (or correlated) with Photocure ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photocure ASA has no effect on the direction of Integral Acquisition i.e., Integral Acquisition and Photocure ASA go up and down completely randomly.

Pair Corralation between Integral Acquisition and Photocure ASA

Given the investment horizon of 90 days Integral Acquisition 1 is expected to under-perform the Photocure ASA. But the stock apears to be less risky and, when comparing its historical volatility, Integral Acquisition 1 is 5.26 times less risky than Photocure ASA. The stock trades about -0.03 of its potential returns per unit of risk. The Photocure ASA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  512.00  in Photocure ASA on September 29, 2024 and sell it today you would earn a total of  48.00  from holding Photocure ASA or generate 9.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.4%
Values	Daily Returns

Integral Acquisition 1  vs.  Photocure ASA

Integral Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integral Acquisition 1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Photocure ASA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Photocure ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Photocure ASA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Integral Acquisition and Photocure ASA

The main advantage of trading using opposite Integral Acquisition and Photocure ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integral Acquisition position performs unexpectedly, Photocure 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 Photocure ASA will offset losses from the drop in Photocure ASA's long position.

The idea behind Integral Acquisition 1 and Photocure ASA 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.