Correlation Between Polar Capital and Hansa Investment
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Hansa Investment 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 Hansa Investment 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 Hansa Investment, you can compare the effects of market volatilities on Polar Capital and Hansa Investment 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 Hansa Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Hansa Investment.
Diversification Opportunities for Polar Capital and Hansa Investment
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Polar and Hansa is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Hansa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Investment 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 Hansa Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Investment has no effect on the direction of Polar Capital i.e., Polar Capital and Hansa Investment go up and down completely randomly.
Pair Corralation between Polar Capital and Hansa Investment
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 1.06 times more return on investment than Hansa Investment. However, Polar Capital is 1.06 times more volatile than Hansa Investment. It trades about 0.06 of its potential returns per unit of risk. Hansa Investment is currently generating about 0.04 per unit of risk. If you would invest 29,250 in Polar Capital Technology on September 1, 2024 and sell it today you would earn a total of 4,350 from holding Polar Capital Technology or generate 14.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Capital Technology vs. Hansa Investment
Performance |
| Timeline |
| Polar Capital Technology |
| Hansa Investment |
Polar Capital and Hansa Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Hansa Investment
The main advantage of trading using opposite Polar Capital and Hansa Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Hansa Investment 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 Hansa Investment will offset losses from the drop in Hansa Investment's long position.| Polar Capital vs. Toyota Motor Corp | Polar Capital vs. SoftBank Group Corp | Polar Capital vs. OTP Bank Nyrt | Polar Capital vs. Las Vegas Sands |
| Hansa Investment vs. CATCo Reinsurance Opportunities | Hansa Investment vs. BH Macro Limited | Hansa Investment vs. Fair Oaks Income | Hansa Investment vs. Legal General Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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