Correlation Between Photocure and Instabank ASA

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

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

Diversification Opportunities for Photocure and Instabank ASA

0.0

Correlation Coefficient

Photocure  Instabank ASA

Pay attention - limited upside

The 3 months correlation between Photocure and Instabank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Photocure and Instabank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instabank ASA and Photocure 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 Photocure are associated (or correlated) with Instabank ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instabank ASA has no effect on the direction of Photocure i.e., Photocure and Instabank ASA go up and down completely randomly.

Pair Corralation between Photocure and Instabank ASA

Assuming the 90 days trading horizon Photocure is expected to generate 1.41 times more return on investment than Instabank ASA. However, Photocure is 1.41 times more volatile than Instabank ASA. It trades about 0.08 of its potential returns per unit of risk. Instabank ASA is currently generating about 0.03 per unit of risk. If you would invest  5,340  in Photocure on September 13, 2024 and sell it today you would earn a total of  510.00  from holding Photocure or generate 9.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Photocure  vs.  Instabank ASA

Photocure

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Photocure are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Photocure may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Instabank ASA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Instabank ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Instabank ASA is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Photocure and Instabank ASA

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

The idea behind Photocure and Instabank ASA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.