Correlation Between Polaris Office and Daewoo Engineering
Can any of the company-specific risk be diversified away by investing in both Polaris Office and Daewoo Engineering 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 Daewoo Engineering 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 Daewoo Engineering Construction, you can compare the effects of market volatilities on Polaris Office and Daewoo Engineering 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 Daewoo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polaris Office and Daewoo Engineering.
Diversification Opportunities for Polaris Office and Daewoo Engineering
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Polaris and Daewoo is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Office Corp and Daewoo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Engineering 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 Daewoo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Engineering has no effect on the direction of Polaris Office i.e., Polaris Office and Daewoo Engineering go up and down completely randomly.
Pair Corralation between Polaris Office and Daewoo Engineering
Assuming the 90 days trading horizon Polaris Office Corp is expected to generate 2.94 times more return on investment than Daewoo Engineering. However, Polaris Office is 2.94 times more volatile than Daewoo Engineering Construction. It trades about 0.05 of its potential returns per unit of risk. Daewoo Engineering Construction is currently generating about -0.03 per unit of risk. If you would invest 468,000 in Polaris Office Corp on September 3, 2024 and sell it today you would earn a total of 185,000 from holding Polaris Office Corp or generate 39.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polaris Office Corp vs. Daewoo Engineering Constructio
Performance |
| Timeline |
| Polaris Office Corp |
| Daewoo Engineering |
Polaris Office and Daewoo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polaris Office and Daewoo Engineering
The main advantage of trading using opposite Polaris Office and Daewoo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polaris Office position performs unexpectedly, Daewoo Engineering 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 Daewoo Engineering will offset losses from the drop in Daewoo Engineering's long position.| Polaris Office vs. Mobile Appliance | Polaris Office vs. KT Submarine Telecom | Polaris Office vs. Korea Alcohol Industrial | Polaris Office vs. Shinsegae Information Communication |
| Daewoo Engineering vs. Netmarble Games Corp | Daewoo Engineering vs. Polaris Office Corp | Daewoo Engineering vs. Daejoo Electronic Materials | Daewoo Engineering vs. Home Center Holdings |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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