Correlation Between Polight ASA and River Tech
Can any of the company-specific risk be diversified away by investing in both Polight ASA and River Tech 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 Polight ASA and River Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polight ASA and River Tech plc, you can compare the effects of market volatilities on Polight ASA and River Tech 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 Polight ASA with a short position of River Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polight ASA and River Tech.
Diversification Opportunities for Polight ASA and River Tech
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Polight and River is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Polight ASA and River Tech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on River Tech plc and Polight ASA 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 Polight ASA are associated (or correlated) with River Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of River Tech plc has no effect on the direction of Polight ASA i.e., Polight ASA and River Tech go up and down completely randomly.
Pair Corralation between Polight ASA and River Tech
Assuming the 90 days trading horizon Polight ASA is expected to under-perform the River Tech. In addition to that, Polight ASA is 1.29 times more volatile than River Tech plc. It trades about -0.02 of its total potential returns per unit of risk. River Tech plc is currently generating about -0.02 per unit of volatility. If you would invest 3,442 in River Tech plc on August 26, 2024 and sell it today you would lose (1,792) from holding River Tech plc or give up 52.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polight ASA vs. River Tech plc
Performance |
| Timeline |
| Polight ASA |
| River Tech plc |
Polight ASA and River Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polight ASA and River Tech
The main advantage of trading using opposite Polight ASA and River Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polight ASA position performs unexpectedly, River Tech 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 River Tech will offset losses from the drop in River Tech's long position.| Polight ASA vs. Europris ASA | Polight ASA vs. Kongsberg Gruppen ASA | Polight ASA vs. Nordic Semiconductor ASA | Polight ASA vs. Storebrand ASA |
| River Tech vs. Huddlestock Fintech As | River Tech vs. Xplora Technologies As | River Tech vs. Polight ASA | River Tech vs. Elkem 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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