Correlation Between PCI Biotech and Photocure

Can any of the company-specific risk be diversified away by investing in both PCI Biotech 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 PCI Biotech and Photocure 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 Photocure, you can compare the effects of market volatilities on PCI Biotech 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 PCI Biotech with a short position of Photocure. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCI Biotech and Photocure.

Diversification Opportunities for PCI Biotech and Photocure

-0.01

Correlation Coefficient

PCI Biotech  Photocure

Good diversification

The 3 months correlation between PCI and Photocure is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding PCI Biotech Holding and Photocure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photocure 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 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 PCI Biotech i.e., PCI Biotech and Photocure go up and down completely randomly.

Pair Corralation between PCI Biotech and Photocure

Assuming the 90 days trading horizon PCI Biotech Holding is expected to under-perform the Photocure. In addition to that, PCI Biotech is 3.17 times more volatile than Photocure. It trades about -0.02 of its total potential returns per unit of risk. Photocure is currently generating about 0.11 per unit of volatility. If you would invest  4,955  in Photocure on September 11, 2024 and sell it today you would earn a total of  735.00  from holding Photocure or generate 14.83% return on investment over 90 days.

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

PCI Biotech Holding  vs.  Photocure

PCI Biotech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCI Biotech Holding 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

8 of 100

OK

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

Pair Trading with PCI Biotech and Photocure

The main advantage of trading using opposite PCI Biotech and Photocure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PCI Biotech 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 PCI Biotech Holding 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 Transaction History module to view history of all your transactions and understand their impact on performance.