Correlation Between Light Science and Polar Capital
Can any of the company-specific risk be diversified away by investing in both Light Science 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 Light Science and Polar Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light Science Technologies and Polar Capital Technology, you can compare the effects of market volatilities on Light Science 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 Light Science with a short position of Polar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Science and Polar Capital.
Diversification Opportunities for Light Science and Polar Capital
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Light and Polar is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Light Science Technologies 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 Light Science 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 Light Science Technologies 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 Light Science i.e., Light Science and Polar Capital go up and down completely randomly.
Pair Corralation between Light Science and Polar Capital
Assuming the 90 days trading horizon Light Science Technologies is expected to under-perform the Polar Capital. In addition to that, Light Science is 3.34 times more volatile than Polar Capital Technology. It trades about -0.09 of its total potential returns per unit of risk. Polar Capital Technology is currently generating about 0.4 per unit of volatility. If you would invest 34,050 in Polar Capital Technology on October 9, 2024 and sell it today you would earn a total of 2,250 from holding Polar Capital Technology or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Light Science Technologies vs. Polar Capital Technology
Performance |
| Timeline |
| Light Science Techno |
| Polar Capital Technology |
Light Science and Polar Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Light Science and Polar Capital
The main advantage of trading using opposite Light Science and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Science 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.| Light Science vs. SupplyMe Capital PLC | Light Science vs. SM Energy Co | Light Science vs. FuelCell Energy | Light Science vs. Grand Vision Media |
| Polar Capital vs. Thor Mining PLC | Polar Capital vs. Virgin Wines UK | Polar Capital vs. DXC Technology Co | Polar Capital vs. Software Circle plc |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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