Correlation Between Polaris Office and Geumhwa Plant
Can any of the company-specific risk be diversified away by investing in both Polaris Office and Geumhwa Plant 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 Geumhwa Plant 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 Geumhwa Plant Service, you can compare the effects of market volatilities on Polaris Office and Geumhwa Plant 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 Geumhwa Plant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polaris Office and Geumhwa Plant.
Diversification Opportunities for Polaris Office and Geumhwa Plant
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Polaris and Geumhwa is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Office Corp and Geumhwa Plant Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geumhwa Plant Service 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 Geumhwa Plant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geumhwa Plant Service has no effect on the direction of Polaris Office i.e., Polaris Office and Geumhwa Plant go up and down completely randomly.
Pair Corralation between Polaris Office and Geumhwa Plant
Assuming the 90 days trading horizon Polaris Office Corp is expected to generate 4.21 times more return on investment than Geumhwa Plant. However, Polaris Office is 4.21 times more volatile than Geumhwa Plant Service. It trades about 0.04 of its potential returns per unit of risk. Geumhwa Plant Service is currently generating about 0.0 per unit of risk. If you would invest 479,000 in Polaris Office Corp on August 29, 2024 and sell it today you would earn a total of 106,000 from holding Polaris Office Corp or generate 22.13% 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. Geumhwa Plant Service
Performance |
| Timeline |
| Polaris Office Corp |
| Geumhwa Plant Service |
Polaris Office and Geumhwa Plant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polaris Office and Geumhwa Plant
The main advantage of trading using opposite Polaris Office and Geumhwa Plant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polaris Office position performs unexpectedly, Geumhwa Plant 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 Geumhwa Plant will offset losses from the drop in Geumhwa Plant's long position.| Polaris Office vs. Korea Real Estate | Polaris Office vs. Korea Ratings Co | Polaris Office vs. IQuest Co | Polaris Office vs. Wonbang Tech Co |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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