Correlation Between Porsche Automobile and Polestar Automotive
Can any of the company-specific risk be diversified away by investing in both Porsche Automobile and Polestar Automotive 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 Porsche Automobile and Polestar Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Porsche Automobile Holding and Polestar Automotive Holding, you can compare the effects of market volatilities on Porsche Automobile and Polestar Automotive 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 Porsche Automobile with a short position of Polestar Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porsche Automobile and Polestar Automotive.
Diversification Opportunities for Porsche Automobile and Polestar Automotive
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Porsche and Polestar is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Porsche Automobile Holding and Polestar Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polestar Automotive and Porsche Automobile 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 Porsche Automobile Holding are associated (or correlated) with Polestar Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polestar Automotive has no effect on the direction of Porsche Automobile i.e., Porsche Automobile and Polestar Automotive go up and down completely randomly.
Pair Corralation between Porsche Automobile and Polestar Automotive
Assuming the 90 days horizon Porsche Automobile Holding is expected to under-perform the Polestar Automotive. But the pink sheet apears to be less risky and, when comparing its historical volatility, Porsche Automobile Holding is 7.76 times less risky than Polestar Automotive. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Polestar Automotive Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Polestar Automotive Holding on November 9, 2024 and sell it today you would lose (2.00) from holding Polestar Automotive Holding or give up 8.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Porsche Automobile Holding vs. Polestar Automotive Holding
Performance |
| Timeline |
| Porsche Automobile |
| Polestar Automotive |
Porsche Automobile and Polestar Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Porsche Automobile and Polestar Automotive
The main advantage of trading using opposite Porsche Automobile and Polestar Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Porsche Automobile position performs unexpectedly, Polestar Automotive 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 Polestar Automotive will offset losses from the drop in Polestar Automotive's long position.| Porsche Automobile vs. Volkswagen AG 110 | Porsche Automobile vs. Volkswagen AG | Porsche Automobile vs. Mercedes Benz Group AG | Porsche Automobile vs. Volkswagen AG Pref |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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