Correlation Between Circa Group and Arctic Bioscience

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

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

Diversification Opportunities for Circa Group and Arctic Bioscience

-0.43

Correlation Coefficient

Circa Group  Arctic Bioscience

Very good diversification

The 3 months correlation between Circa and Arctic is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Circa Group AS and Arctic Bioscience AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Bioscience and Circa Group 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 Circa Group AS are associated (or correlated) with Arctic Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Bioscience has no effect on the direction of Circa Group i.e., Circa Group and Arctic Bioscience go up and down completely randomly.

Pair Corralation between Circa Group and Arctic Bioscience

Assuming the 90 days trading horizon Circa Group AS is expected to generate 0.26 times more return on investment than Arctic Bioscience. However, Circa Group AS is 3.9 times less risky than Arctic Bioscience. It trades about 0.17 of its potential returns per unit of risk. Arctic Bioscience AS is currently generating about -0.1 per unit of risk. If you would invest  45.00  in Circa Group AS on September 13, 2024 and sell it today you would earn a total of  19.00  from holding Circa Group AS or generate 42.22% return on investment over 90 days.

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

Circa Group AS  vs.  Arctic Bioscience AS

Circa Group AS

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Circa Group AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Circa Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Arctic Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arctic Bioscience AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Circa Group and Arctic Bioscience

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

The idea behind Circa Group AS and Arctic Bioscience AS 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.