Correlation Between Petronor and PCI Biotech

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

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

Diversification Opportunities for Petronor and PCI Biotech

0.76

Correlation Coefficient

Petronor  PCI Biotech

Poor diversification

The 3 months correlation between Petronor and PCI is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Petronor EP 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 Petronor 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 Petronor EP 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 Petronor i.e., Petronor and PCI Biotech go up and down completely randomly.

Pair Corralation between Petronor and PCI Biotech

Assuming the 90 days trading horizon Petronor EP is expected to generate 0.53 times more return on investment than PCI Biotech. However, Petronor EP is 1.88 times less risky than PCI Biotech. It trades about 0.18 of its potential returns per unit of risk. PCI Biotech Holding is currently generating about 0.09 per unit of risk. If you would invest  858.00  in Petronor EP on April 23, 2025 and sell it today you would earn a total of  250.00  from holding Petronor EP or generate 29.14% return on investment over 90 days.

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

Petronor EP  vs.  PCI Biotech Holding

Petronor EP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Petronor EP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Petronor disclosed solid returns over the last few months and may actually be approaching a breakup point.

PCI Biotech Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PCI Biotech Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, PCI Biotech disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petronor and PCI Biotech

The main advantage of trading using opposite Petronor and PCI Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronor 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 Petronor EP 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.