Correlation Between Polygiene and Precise Biometrics

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

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

Diversification Opportunities for Polygiene and Precise Biometrics

0.06

Correlation Coefficient

Polygiene  Precise Biometrics

Significant diversification

The 3 months correlation between Polygiene and Precise is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Polygiene AB and Precise Biometrics AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precise Biometrics and Polygiene 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 Polygiene AB are associated (or correlated) with Precise Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precise Biometrics has no effect on the direction of Polygiene i.e., Polygiene and Precise Biometrics go up and down completely randomly.

Pair Corralation between Polygiene and Precise Biometrics

Assuming the 90 days trading horizon Polygiene AB is expected to generate 0.66 times more return on investment than Precise Biometrics. However, Polygiene AB is 1.52 times less risky than Precise Biometrics. It trades about -0.04 of its potential returns per unit of risk. Precise Biometrics AB is currently generating about -0.16 per unit of risk. If you would invest  1,270  in Polygiene AB on November 28, 2024 and sell it today you would lose (115.00) from holding Polygiene AB or give up 9.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Polygiene AB  vs.  Precise Biometrics AB

Polygiene AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polygiene AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Precise Biometrics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Precise Biometrics AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Polygiene and Precise Biometrics

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

The idea behind Polygiene AB and Precise Biometrics AB 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.