Correlation Between 5Th Planet and Polight ASA
Can any of the company-specific risk be diversified away by investing in both 5Th Planet and Polight ASA 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 5Th Planet and Polight ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 5Th Planet Games and Polight ASA, you can compare the effects of market volatilities on 5Th Planet and Polight ASA 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 5Th Planet with a short position of Polight ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of 5Th Planet and Polight ASA.
Diversification Opportunities for 5Th Planet and Polight ASA
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 5Th and Polight is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding 5Th Planet Games and Polight ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polight ASA and 5Th Planet 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 5Th Planet Games are associated (or correlated) with Polight ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polight ASA has no effect on the direction of 5Th Planet i.e., 5Th Planet and Polight ASA go up and down completely randomly.
Pair Corralation between 5Th Planet and Polight ASA
Assuming the 90 days trading horizon 5Th Planet Games is expected to under-perform the Polight ASA. But the stock apears to be less risky and, when comparing its historical volatility, 5Th Planet Games is 1.65 times less risky than Polight ASA. The stock trades about -0.07 of its potential returns per unit of risk. The Polight ASA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 257.00 in Polight ASA on September 3, 2024 and sell it today you would earn a total of 168.00 from holding Polight ASA or generate 65.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
5Th Planet Games vs. Polight ASA
Performance |
| Timeline |
| 5Th Planet Games |
| Polight ASA |
5Th Planet and Polight ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 5Th Planet and Polight ASA
The main advantage of trading using opposite 5Th Planet and Polight ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 5Th Planet position performs unexpectedly, Polight ASA 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 Polight ASA will offset losses from the drop in Polight ASA's long position.| 5Th Planet vs. Solstad Offsho | 5Th Planet vs. Saga Pure ASA | 5Th Planet vs. REC Silicon ASA | 5Th Planet vs. Kongsberg Automotive Holding |
| Polight ASA vs. Elliptic Laboratories AS | Polight ASA vs. Kongsberg Automotive Holding | Polight ASA vs. REC Silicon ASA | Polight ASA vs. Elkem ASA |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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