Correlation Between Korea Electronic and Polaris Office

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Can any of the company-specific risk be diversified away by investing in both Korea Electronic 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 Korea Electronic and Polaris Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Electronic Certification and Polaris Office Corp, you can compare the effects of market volatilities on Korea Electronic 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 Korea Electronic with a short position of Polaris Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electronic and Polaris Office.

Diversification Opportunities for Korea Electronic and Polaris Office

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Korea and Polaris is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electronic Certification 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 Korea Electronic 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 Korea Electronic Certification 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 Korea Electronic i.e., Korea Electronic and Polaris Office go up and down completely randomly.

Pair Corralation between Korea Electronic and Polaris Office

Assuming the 90 days trading horizon Korea Electronic Certification is expected to under-perform the Polaris Office. But the stock apears to be less risky and, when comparing its historical volatility, Korea Electronic Certification is 1.84 times less risky than Polaris Office. The stock trades about -0.07 of its potential returns per unit of risk. The Polaris Office Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  578,000  in Polaris Office Corp on September 25, 2024 and sell it today you would lose (8,000) from holding Polaris Office Corp or give up 1.38% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Korea Electronic Certification  vs.  Polaris Office Corp

 Performance 
       Timeline  
Korea Electronic Cer 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Korea Electronic Certification has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Polaris Office Corp 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Polaris Office Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Polaris Office may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Korea Electronic and Polaris Office Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Korea Electronic and Polaris Office

The main advantage of trading using opposite Korea Electronic and Polaris Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electronic 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.
The idea behind Korea Electronic Certification and Polaris Office Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stocks Directory module to find actively traded stocks across global markets.

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