Correlation Between Insung Information and Polaris Office
Can any of the company-specific risk be diversified away by investing in both Insung Information and Polaris Office 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 Insung Information and Polaris Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insung Information Co and Polaris Office Corp, you can compare the effects of market volatilities on Insung Information and Polaris Office 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 Insung Information with a short position of Polaris Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insung Information and Polaris Office.
Diversification Opportunities for Insung Information and Polaris Office
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Insung and Polaris is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Insung Information Co and Polaris Office Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polaris Office Corp and Insung Information 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 Insung Information Co are associated (or correlated) with Polaris Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polaris Office Corp has no effect on the direction of Insung Information i.e., Insung Information and Polaris Office go up and down completely randomly.
Pair Corralation between Insung Information and Polaris Office
Assuming the 90 days trading horizon Insung Information is expected to generate 3.85 times less return on investment than Polaris Office. But when comparing it to its historical volatility, Insung Information Co is 1.27 times less risky than Polaris Office. It trades about 0.03 of its potential returns per unit of risk. Polaris Office Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 153,000 in Polaris Office Corp on September 2, 2024 and sell it today you would earn a total of 500,000 from holding Polaris Office Corp or generate 326.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insung Information Co vs. Polaris Office Corp
Performance |
| Timeline |
| Insung Information |
| Polaris Office Corp |
Insung Information and Polaris Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insung Information and Polaris Office
The main advantage of trading using opposite Insung Information and Polaris Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insung Information position performs unexpectedly, Polaris Office 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 Polaris Office will offset losses from the drop in Polaris Office's long position.| Insung Information vs. Dongsin Engineering Construction | Insung Information vs. Doosan Fuel Cell | Insung Information vs. Daishin Balance 1 | Insung Information vs. Total Soft Bank |
| Polaris Office vs. LG Household Healthcare | Polaris Office vs. SCI Information Service | Polaris Office vs. Korea Alcohol Industrial | Polaris Office vs. Dongbang Transport Logistics |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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