Correlation Between Polaris Media and Baltic Sea
Can any of the company-specific risk be diversified away by investing in both Polaris Media and Baltic Sea 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 Polaris Media and Baltic Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polaris Media and Baltic Sea Properties, you can compare the effects of market volatilities on Polaris Media and Baltic Sea 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 Polaris Media with a short position of Baltic Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polaris Media and Baltic Sea.
Diversification Opportunities for Polaris Media and Baltic Sea
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Polaris and Baltic is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Media and Baltic Sea Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baltic Sea Properties and Polaris Media 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 Polaris Media are associated (or correlated) with Baltic Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baltic Sea Properties has no effect on the direction of Polaris Media i.e., Polaris Media and Baltic Sea go up and down completely randomly.
Pair Corralation between Polaris Media and Baltic Sea
Assuming the 90 days trading horizon Polaris Media is expected to generate 2.26 times more return on investment than Baltic Sea. However, Polaris Media is 2.26 times more volatile than Baltic Sea Properties. It trades about 0.05 of its potential returns per unit of risk. Baltic Sea Properties is currently generating about 0.02 per unit of risk. If you would invest 5,590 in Polaris Media on September 12, 2024 and sell it today you would earn a total of 3,160 from holding Polaris Media or generate 56.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polaris Media vs. Baltic Sea Properties
Performance |
| Timeline |
| Polaris Media |
| Baltic Sea Properties |
Polaris Media and Baltic Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polaris Media and Baltic Sea
The main advantage of trading using opposite Polaris Media and Baltic Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polaris Media position performs unexpectedly, Baltic Sea 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 Baltic Sea will offset losses from the drop in Baltic Sea's long position.| Polaris Media vs. Kitron ASA | Polaris Media vs. Olav Thon Eien | Polaris Media vs. Kongsberg Gruppen ASA | Polaris Media vs. Napatech AS |
| Baltic Sea vs. Entra ASA | Baltic Sea vs. Selvaag Bolig ASA | Baltic Sea vs. Kmc Properties ASA | Baltic Sea vs. RomReal Limited |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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