Correlation Between Photocure ASA and Green Thumb

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

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

Diversification Opportunities for Photocure ASA and Green Thumb

-0.51

Correlation Coefficient

Photocure ASA  Green Thumb

Excellent diversification

The 3 months correlation between Photocure and Green is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Photocure ASA and Green Thumb Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Thumb Industries and Photocure 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 Photocure ASA are associated (or correlated) with Green Thumb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Thumb Industries has no effect on the direction of Photocure ASA i.e., Photocure ASA and Green Thumb go up and down completely randomly.

Pair Corralation between Photocure ASA and Green Thumb

Assuming the 90 days horizon Photocure ASA is expected to under-perform the Green Thumb. But the pink sheet apears to be less risky and, when comparing its historical volatility, Photocure ASA is 1.12 times less risky than Green Thumb. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Green Thumb Industries is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  751.00  in Green Thumb Industries on October 21, 2024 and sell it today you would lose (8.00) from holding Green Thumb Industries or give up 1.07% of portfolio value over 90 days.

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

Photocure ASA  vs.  Green Thumb Industries

Photocure ASA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Photocure ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Photocure ASA reported solid returns over the last few months and may actually be approaching a breakup point.

Green Thumb Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Thumb Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Photocure ASA and Green Thumb

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

The idea behind Photocure ASA and Green Thumb Industries 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.