Correlation Between Polar Capital and Alfa Financial
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Alfa Financial 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 Alfa Financial 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 Alfa Financial Software, you can compare the effects of market volatilities on Polar Capital and Alfa Financial 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 Alfa Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Alfa Financial.
Diversification Opportunities for Polar Capital and Alfa Financial
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Polar and Alfa is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Alfa Financial Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Financial Software 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 Alfa Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Financial Software has no effect on the direction of Polar Capital i.e., Polar Capital and Alfa Financial go up and down completely randomly.
Pair Corralation between Polar Capital and Alfa Financial
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.7 times more return on investment than Alfa Financial. However, Polar Capital Technology is 1.44 times less risky than Alfa Financial. It trades about 0.15 of its potential returns per unit of risk. Alfa Financial Software is currently generating about 0.08 per unit of risk. If you would invest 31,450 in Polar Capital Technology on August 30, 2024 and sell it today you would earn a total of 1,750 from holding Polar Capital Technology or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Capital Technology vs. Alfa Financial Software
Performance |
| Timeline |
| Polar Capital Technology |
| Alfa Financial Software |
Polar Capital and Alfa Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Alfa Financial
The main advantage of trading using opposite Polar Capital and Alfa Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Alfa Financial 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 Alfa Financial will offset losses from the drop in Alfa Financial's long position.| Polar Capital vs. Samsung Electronics Co | Polar Capital vs. Samsung Electronics Co | Polar Capital vs. Hyundai Motor | Polar Capital vs. Toyota Motor Corp |
| Alfa Financial vs. Samsung Electronics Co | Alfa Financial vs. Samsung Electronics Co | Alfa Financial vs. Hyundai Motor | Alfa Financial vs. Toyota Motor Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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