Correlation Between Polaris Office and Daedong Gear
Can any of the company-specific risk be diversified away by investing in both Polaris Office and Daedong Gear 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 Daedong Gear 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 Daedong Gear Co, you can compare the effects of market volatilities on Polaris Office and Daedong Gear 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 Daedong Gear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polaris Office and Daedong Gear.
Diversification Opportunities for Polaris Office and Daedong Gear
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Polaris and Daedong is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Office Corp and Daedong Gear Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong Gear 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 Daedong Gear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daedong Gear has no effect on the direction of Polaris Office i.e., Polaris Office and Daedong Gear go up and down completely randomly.
Pair Corralation between Polaris Office and Daedong Gear
Assuming the 90 days trading horizon Polaris Office is expected to generate 1.49 times less return on investment than Daedong Gear. But when comparing it to its historical volatility, Polaris Office Corp is 1.34 times less risky than Daedong Gear. It trades about 0.23 of its potential returns per unit of risk. Daedong Gear Co is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 774,000 in Daedong Gear Co on September 2, 2024 and sell it today you would earn a total of 347,000 from holding Daedong Gear Co or generate 44.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polaris Office Corp vs. Daedong Gear Co
Performance |
| Timeline |
| Polaris Office Corp |
| Daedong Gear |
Polaris Office and Daedong Gear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polaris Office and Daedong Gear
The main advantage of trading using opposite Polaris Office and Daedong Gear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polaris Office position performs unexpectedly, Daedong Gear 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 Daedong Gear will offset losses from the drop in Daedong Gear's long position.| 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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