Correlation Between Polar Capital and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Telenor 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 Polar Capital and Telenor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polar Capital Technology and Telenor ASA, you can compare the effects of market volatilities on Polar Capital and Telenor 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 Polar Capital with a short position of Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Telenor ASA.
Diversification Opportunities for Polar Capital and Telenor ASA
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Polar and Telenor is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Telenor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA and Polar Capital 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 Polar Capital Technology are associated (or correlated) with Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA has no effect on the direction of Polar Capital i.e., Polar Capital and Telenor ASA go up and down completely randomly.
Pair Corralation between Polar Capital and Telenor ASA
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 1.68 times more return on investment than Telenor ASA. However, Polar Capital is 1.68 times more volatile than Telenor ASA. It trades about 0.24 of its potential returns per unit of risk. Telenor ASA is currently generating about -0.21 per unit of risk. If you would invest 31,100 in Polar Capital Technology on September 3, 2024 and sell it today you would earn a total of 2,500 from holding Polar Capital Technology or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Capital Technology vs. Telenor ASA
Performance |
| Timeline |
| Polar Capital Technology |
| Telenor ASA |
Polar Capital and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Telenor ASA
The main advantage of trading using opposite Polar Capital and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Telenor 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 Telenor ASA will offset losses from the drop in Telenor ASA's long position.| Polar Capital vs. Finnair Oyj | Polar Capital vs. Taylor Maritime Investments | Polar Capital vs. Aeorema Communications Plc | Polar Capital vs. Norwegian Air Shuttle |
| Telenor ASA vs. Federal Realty Investment | Telenor ASA vs. Kinnevik Investment AB | Telenor ASA vs. Vulcan Materials Co | Telenor ASA vs. Taylor Maritime Investments |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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