Correlation Between Photocure and Navamedic ASA

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

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

Diversification Opportunities for Photocure and Navamedic ASA

0.04

Correlation Coefficient

Photocure  Navamedic ASA

Significant diversification

The 3 months correlation between Photocure and Navamedic is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Photocure and Navamedic ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navamedic ASA and Photocure 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 are associated (or correlated) with Navamedic ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navamedic ASA has no effect on the direction of Photocure i.e., Photocure and Navamedic ASA go up and down completely randomly.

Pair Corralation between Photocure and Navamedic ASA

Assuming the 90 days trading horizon Photocure is expected to generate 0.61 times more return on investment than Navamedic ASA. However, Photocure is 1.64 times less risky than Navamedic ASA. It trades about 0.02 of its potential returns per unit of risk. Navamedic ASA is currently generating about -0.05 per unit of risk. If you would invest  5,060  in Photocure on September 7, 2024 and sell it today you would earn a total of  60.00  from holding Photocure or generate 1.19% return on investment over 90 days.

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

Photocure  vs.  Navamedic ASA

Photocure

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Photocure are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

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.

Pair Trading with Photocure and Navamedic ASA

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

The idea behind Photocure and Navamedic 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.