Correlation Between TC BioPharm and Living Cell

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

Diversification Opportunities for TC BioPharm and Living Cell

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between TCBPW and Living is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding TC BioPharm plc and Living Cell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Living Cell Technologies 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 Living Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Living Cell Technologies has no effect on the direction of TC BioPharm i.e., TC BioPharm and Living Cell go up and down completely randomly.

Pair Corralation between TC BioPharm and Living Cell

Assuming the 90 days horizon TC BioPharm plc is expected to generate 1.61 times more return on investment than Living Cell. However, TC BioPharm is 1.61 times more volatile than Living Cell Technologies. It trades about 0.1 of its potential returns per unit of risk. Living Cell Technologies is currently generating about 0.04 per unit of risk. If you would invest  11.00  in TC BioPharm plc on October 13, 2024 and sell it today you would lose (9.50) from holding TC BioPharm plc or give up 86.36% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy87.15%
ValuesDaily Returns

TC BioPharm plc  vs.  Living Cell Technologies

 Performance 
       Timeline  
TC BioPharm plc 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
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.
Living Cell Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Living Cell Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TC BioPharm and Living Cell Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TC BioPharm and Living Cell

The main advantage of trading using opposite TC BioPharm and Living Cell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC BioPharm position performs unexpectedly, Living Cell 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 Living Cell will offset losses from the drop in Living Cell's long position.
The idea behind TC BioPharm plc and Living Cell Technologies 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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