Correlation Between LAKE MATERIALS and Polaris Office
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS 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 LAKE MATERIALS and Polaris Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAKE MATERIALS LTD and Polaris Office Corp, you can compare the effects of market volatilities on LAKE MATERIALS 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 LAKE MATERIALS with a short position of Polaris Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and Polaris Office.
Diversification Opportunities for LAKE MATERIALS and Polaris Office
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between LAKE and Polaris is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD 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 LAKE MATERIALS 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 LAKE MATERIALS LTD 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 LAKE MATERIALS i.e., LAKE MATERIALS and Polaris Office go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and Polaris Office
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to under-perform the Polaris Office. But the stock apears to be less risky and, when comparing its historical volatility, LAKE MATERIALS LTD is 1.71 times less risky than Polaris Office. The stock trades about -0.28 of its potential returns per unit of risk. The Polaris Office Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 523,000 in Polaris Office Corp on September 1, 2024 and sell it today you would earn a total of 130,000 from holding Polaris Office Corp or generate 24.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAKE MATERIALS LTD vs. Polaris Office Corp
Performance |
| Timeline |
| LAKE MATERIALS LTD |
| Polaris Office Corp |
LAKE MATERIALS and Polaris Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAKE MATERIALS and Polaris Office
The main advantage of trading using opposite LAKE MATERIALS and Polaris Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS 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.| LAKE MATERIALS vs. Samsung Electronics Co | LAKE MATERIALS vs. Samsung Electronics Co | LAKE MATERIALS vs. LG Energy Solution | LAKE MATERIALS vs. SK Hynix |
| Polaris Office vs. Dongsin Engineering Construction | Polaris Office vs. Doosan Fuel Cell | Polaris Office vs. Daishin Balance 1 | Polaris Office vs. Total Soft Bank |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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