Correlation Between Telenor ASA and Polar Capital
Can any of the company-specific risk be diversified away by investing in both Telenor ASA and Polar Capital 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 Telenor ASA and Polar Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telenor ASA and Polar Capital Technology, you can compare the effects of market volatilities on Telenor ASA and Polar Capital 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 Telenor ASA with a short position of Polar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telenor ASA and Polar Capital.
Diversification Opportunities for Telenor ASA and Polar Capital
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Telenor and Polar is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Telenor ASA and Polar Capital Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Capital Technology and Telenor ASA 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 Telenor ASA are associated (or correlated) with Polar Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Capital Technology has no effect on the direction of Telenor ASA i.e., Telenor ASA and Polar Capital go up and down completely randomly.
Pair Corralation between Telenor ASA and Polar Capital
Assuming the 90 days trading horizon Telenor ASA is expected to under-perform the Polar Capital. But the stock apears to be less risky and, when comparing its historical volatility, Telenor ASA is 1.56 times less risky than Polar Capital. The stock trades about -0.1 of its potential returns per unit of risk. The Polar Capital Technology is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 31,050 in Polar Capital Technology on September 1, 2024 and sell it today you would earn a total of 2,550 from holding Polar Capital Technology or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Telenor ASA vs. Polar Capital Technology
Performance |
| Timeline |
| Telenor ASA |
| Polar Capital Technology |
Telenor ASA and Polar Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telenor ASA and Polar Capital
The main advantage of trading using opposite Telenor ASA and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telenor ASA position performs unexpectedly, Polar Capital 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 Polar Capital will offset losses from the drop in Polar Capital's long position.| Telenor ASA vs. Polar Capital Technology | Telenor ASA vs. DXC Technology Co | Telenor ASA vs. Sunny Optical Technology | Telenor ASA vs. Cognizant Technology Solutions |
| Polar Capital vs. Toyota Motor Corp | Polar Capital vs. SoftBank Group Corp | Polar Capital vs. OTP Bank Nyrt | Polar Capital vs. Las Vegas Sands |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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