Correlation Between Sparebanken Sor and PCI Biotech

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

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

Diversification Opportunities for Sparebanken Sor and PCI Biotech

-0.69

Correlation Coefficient

Sparebanken Sor  PCI Biotech

Excellent diversification

The 3 months correlation between Sparebanken and PCI is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Sor and PCI Biotech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCI Biotech Holding and Sparebanken Sor 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 Sparebanken Sor are associated (or correlated) with PCI Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCI Biotech Holding has no effect on the direction of Sparebanken Sor i.e., Sparebanken Sor and PCI Biotech go up and down completely randomly.

Pair Corralation between Sparebanken Sor and PCI Biotech

Assuming the 90 days trading horizon Sparebanken Sor is expected to generate 0.16 times more return on investment than PCI Biotech. However, Sparebanken Sor is 6.24 times less risky than PCI Biotech. It trades about 0.03 of its potential returns per unit of risk. PCI Biotech Holding is currently generating about 0.0 per unit of risk. If you would invest  18,498  in Sparebanken Sor on August 30, 2024 and sell it today you would earn a total of  300.00  from holding Sparebanken Sor or generate 1.62% return on investment over 90 days.

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

Sparebanken Sor  vs.  PCI Biotech Holding

Sparebanken Sor

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebanken Sor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Sparebanken Sor is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

PCI Biotech Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCI Biotech Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, PCI Biotech is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sparebanken Sor and PCI Biotech

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

The idea behind Sparebanken Sor and PCI Biotech Holding 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..