Correlation Between Photocure and Ultimovacs ASA

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

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

Diversification Opportunities for Photocure and Ultimovacs ASA

0.54

Correlation Coefficient

Photocure  Ultimovacs ASA

Very weak diversification

The 3 months correlation between Photocure and Ultimovacs is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Photocure and Ultimovacs ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultimovacs 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 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 Photocure i.e., Photocure and Ultimovacs ASA go up and down completely randomly.

Pair Corralation between Photocure and Ultimovacs ASA

Assuming the 90 days trading horizon Photocure is expected to generate 3.13 times less return on investment than Ultimovacs ASA. But when comparing it to its historical volatility, Photocure is 1.7 times less risky than Ultimovacs ASA. It trades about 0.05 of its potential returns per unit of risk. Ultimovacs ASA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  198.00  in Ultimovacs ASA on November 29, 2024 and sell it today you would earn a total of  33.00  from holding Ultimovacs ASA or generate 16.67% return on investment over 90 days.

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

Photocure  vs.  Ultimovacs ASA

Photocure

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Photocure are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Photocure may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Ultimovacs ASA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ultimovacs ASA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Ultimovacs ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Photocure and Ultimovacs ASA

The main advantage of trading using opposite Photocure and Ultimovacs ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Photocure 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 Photocure 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.