Correlation Between Polaris Office and Seah Steel
Can any of the company-specific risk be diversified away by investing in both Polaris Office and Seah Steel 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 Polaris Office and Seah Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polaris Office Corp and Seah Steel Corp, you can compare the effects of market volatilities on Polaris Office and Seah Steel 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 Polaris Office with a short position of Seah Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polaris Office and Seah Steel.
Diversification Opportunities for Polaris Office and Seah Steel
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Polaris and Seah is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Office Corp and Seah Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seah Steel Corp and Polaris Office 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 Polaris Office Corp are associated (or correlated) with Seah Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seah Steel Corp has no effect on the direction of Polaris Office i.e., Polaris Office and Seah Steel go up and down completely randomly.
Pair Corralation between Polaris Office and Seah Steel
Assuming the 90 days trading horizon Polaris Office Corp is expected to generate 1.38 times more return on investment than Seah Steel. However, Polaris Office is 1.38 times more volatile than Seah Steel Corp. It trades about 0.17 of its potential returns per unit of risk. Seah Steel Corp is currently generating about 0.1 per unit of risk. If you would invest 506,000 in Polaris Office Corp on August 29, 2024 and sell it today you would earn a total of 79,000 from holding Polaris Office Corp or generate 15.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polaris Office Corp vs. Seah Steel Corp
Performance |
| Timeline |
| Polaris Office Corp |
| Seah Steel Corp |
Polaris Office and Seah Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polaris Office and Seah Steel
The main advantage of trading using opposite Polaris Office and Seah Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polaris Office position performs unexpectedly, Seah Steel 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 Seah Steel will offset losses from the drop in Seah Steel's long position.| Polaris Office vs. Daou Data Corp | Polaris Office vs. Busan Industrial Co | Polaris Office vs. Busan Ind | Polaris Office vs. Shinhan WTI Futures |
| Seah Steel vs. LB Investment | Seah Steel vs. Polaris Office Corp | Seah Steel vs. Wireless Power Amplifier | Seah Steel vs. SBI Investment KOREA |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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