Correlation Between Navamedic ASA and Photocure

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

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

Diversification Opportunities for Navamedic ASA and Photocure

0.03

Correlation Coefficient

Navamedic ASA  Photocure

Significant diversification

The 3 months correlation between Navamedic and Photocure is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Navamedic ASA and Photocure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photocure and Navamedic 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 Navamedic 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 Navamedic ASA i.e., Navamedic ASA and Photocure go up and down completely randomly.

Pair Corralation between Navamedic ASA and Photocure

Assuming the 90 days trading horizon Navamedic ASA is expected to under-perform the Photocure. In addition to that, Navamedic ASA is 1.63 times more volatile than Photocure. It trades about -0.04 of its total potential returns per unit of risk. Photocure is currently generating about -0.01 per unit of volatility. If you would invest  5,150  in Photocure on September 5, 2024 and sell it today you would lose (160.00) from holding Photocure or give up 3.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Navamedic ASA  vs.  Photocure

Navamedic ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navamedic ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Photocure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Photocure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Photocure is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Navamedic ASA and Photocure

The main advantage of trading using opposite Navamedic ASA and Photocure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navamedic 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.

The idea behind Navamedic ASA and Photocure 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.