Correlation Between TC BioPharm and Kane Biotech

Can any of the company-specific risk be diversified away by investing in both TC BioPharm and Kane Biotech 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 Kane Biotech 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 Kane Biotech, you can compare the effects of market volatilities on TC BioPharm and Kane Biotech 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 Kane Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of TC BioPharm and Kane Biotech.

Diversification Opportunities for TC BioPharm and Kane Biotech

0.67

Correlation Coefficient

TC BioPharm  Kane Biotech

Poor diversification

The 3 months correlation between TCBPW and Kane is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding TC BioPharm plc and Kane Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kane Biotech 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 Kane Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kane Biotech has no effect on the direction of TC BioPharm i.e., TC BioPharm and Kane Biotech go up and down completely randomly.

Pair Corralation between TC BioPharm and Kane Biotech

Assuming the 90 days horizon TC BioPharm plc is expected to generate 21.57 times more return on investment than Kane Biotech. However, TC BioPharm is 21.57 times more volatile than Kane Biotech. It trades about 0.11 of its potential returns per unit of risk. Kane Biotech is currently generating about 0.03 per unit of risk. If you would invest  3.25  in TC BioPharm plc on September 24, 2024 and sell it today you would lose (1.72) from holding TC BioPharm plc or give up 52.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.32%
Values	Daily Returns

TC BioPharm plc  vs.  Kane Biotech

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 unsteady basic indicators, TC BioPharm showed solid returns over the last few months and may actually be approaching a breakup point.

Kane Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kane Biotech 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TC BioPharm and Kane Biotech

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

The idea behind TC BioPharm plc and Kane Biotech 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.