Correlation Between PCI Biotech and Ultimovacs ASA

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

Diversification Opportunities for PCI Biotech and Ultimovacs ASA

0.13

Correlation Coefficient

PCI Biotech  Ultimovacs ASA

Average diversification

The 3 months correlation between PCI and Ultimovacs is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding PCI Biotech Holding and Ultimovacs ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultimovacs 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 Ultimovacs ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultimovacs ASA has no effect on the direction of PCI Biotech i.e., PCI Biotech and Ultimovacs ASA go up and down completely randomly.

Pair Corralation between PCI Biotech and Ultimovacs ASA

Assuming the 90 days trading horizon PCI Biotech Holding is expected to generate 1.05 times more return on investment than Ultimovacs ASA. However, PCI Biotech is 1.05 times more volatile than Ultimovacs ASA. It trades about -0.01 of its potential returns per unit of risk. Ultimovacs ASA is currently generating about -0.03 per unit of risk. If you would invest  182.00  in PCI Biotech Holding on September 3, 2024 and sell it today you would lose (32.00) from holding PCI Biotech Holding or give up 17.58% of portfolio value over 90 days.

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

PCI Biotech Holding  vs.  Ultimovacs ASA

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 quite persistent essential indicators, PCI Biotech is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Ultimovacs ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultimovacs ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating 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.

Pair Trading with PCI Biotech and Ultimovacs ASA

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

The idea behind PCI Biotech Holding and Ultimovacs 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.