Correlation Between Polar Capital and Faron Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Faron Pharmaceuticals 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 Faron Pharmaceuticals 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 Faron Pharmaceuticals Oy, you can compare the effects of market volatilities on Polar Capital and Faron Pharmaceuticals 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 Faron Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Faron Pharmaceuticals.
Diversification Opportunities for Polar Capital and Faron Pharmaceuticals
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Polar and Faron is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Faron Pharmaceuticals Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faron Pharmaceuticals 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 Faron Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faron Pharmaceuticals has no effect on the direction of Polar Capital i.e., Polar Capital and Faron Pharmaceuticals go up and down completely randomly.
Pair Corralation between Polar Capital and Faron Pharmaceuticals
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.21 times more return on investment than Faron Pharmaceuticals. However, Polar Capital Technology is 4.84 times less risky than Faron Pharmaceuticals. It trades about 0.1 of its potential returns per unit of risk. Faron Pharmaceuticals Oy is currently generating about 0.01 per unit of risk. If you would invest 24,100 in Polar Capital Technology on September 21, 2024 and sell it today you would earn a total of 10,200 from holding Polar Capital Technology or generate 42.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Capital Technology vs. Faron Pharmaceuticals Oy
Performance |
| Timeline |
| Polar Capital Technology |
| Faron Pharmaceuticals |
Polar Capital and Faron Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Faron Pharmaceuticals
The main advantage of trading using opposite Polar Capital and Faron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Faron Pharmaceuticals 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 Faron Pharmaceuticals will offset losses from the drop in Faron Pharmaceuticals' long position.| Polar Capital vs. Catalyst Media Group | Polar Capital vs. CATLIN GROUP | Polar Capital vs. Tamburi Investment Partners | Polar Capital vs. Magnora 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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