Correlation Between PCI Biotech and Hofseth Biocare

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

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

Diversification Opportunities for PCI Biotech and Hofseth Biocare

0.0

Correlation Coefficient

PCI Biotech  Hofseth Biocare

Pay attention - limited upside

The 3 months correlation between PCI and Hofseth is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PCI Biotech Holding and Hofseth Biocare ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hofseth Biocare ASA and PCI 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 PCI Biotech Holding are associated (or correlated) with Hofseth Biocare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hofseth Biocare ASA has no effect on the direction of PCI Biotech i.e., PCI Biotech and Hofseth Biocare go up and down completely randomly.

Pair Corralation between PCI Biotech and Hofseth Biocare

Assuming the 90 days trading horizon PCI Biotech is expected to generate 1.94 times less return on investment than Hofseth Biocare. But when comparing it to its historical volatility, PCI Biotech Holding is 1.01 times less risky than Hofseth Biocare. It trades about 0.07 of its potential returns per unit of risk. Hofseth Biocare ASA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  170.00  in Hofseth Biocare ASA on December 29, 2024 and sell it today you would earn a total of  78.00  from holding Hofseth Biocare ASA or generate 45.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

PCI Biotech Holding  vs.  Hofseth Biocare ASA

PCI Biotech Holding

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PCI Biotech Holding are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, PCI Biotech disclosed solid returns over the last few months and may actually be approaching a breakup point.

Hofseth Biocare ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hofseth Biocare ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Hofseth Biocare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PCI Biotech and Hofseth Biocare

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

The idea behind PCI Biotech Holding and Hofseth Biocare 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.