Correlation Between TC BioPharm and Perspective Therapeutics

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

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

Diversification Opportunities for TC BioPharm and Perspective Therapeutics

0.51

Correlation Coefficient

TC BioPharm  Perspective Therapeutics

Very weak diversification

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

Pair Corralation between TC BioPharm and Perspective Therapeutics

Assuming the 90 days horizon TC BioPharm plc is expected to generate 2.97 times more return on investment than Perspective Therapeutics. However, TC BioPharm is 2.97 times more volatile than Perspective Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Perspective Therapeutics is currently generating about -0.21 per unit of risk. If you would invest  2.00  in TC BioPharm plc on September 13, 2024 and sell it today you would lose (1.13) from holding TC BioPharm plc or give up 56.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

TC BioPharm plc  vs.  Perspective Therapeutics

TC BioPharm plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TC BioPharm plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, TC BioPharm showed solid returns over the last few months and may actually be approaching a breakup point.

Perspective Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perspective Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TC BioPharm and Perspective Therapeutics

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

The idea behind TC BioPharm plc and Perspective Therapeutics 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 Stocks Directory module to find actively traded stocks across global markets.