Correlation Between Polaris Media and Kraft Bank
Can any of the company-specific risk be diversified away by investing in both Polaris Media and Kraft Bank 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 Kraft Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polaris Media and Kraft Bank Asa, you can compare the effects of market volatilities on Polaris Media and Kraft Bank 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 Kraft Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polaris Media and Kraft Bank.
Diversification Opportunities for Polaris Media and Kraft Bank
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Polaris and Kraft is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Media and Kraft Bank Asa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Bank Asa 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 Kraft Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Bank Asa has no effect on the direction of Polaris Media i.e., Polaris Media and Kraft Bank go up and down completely randomly.
Pair Corralation between Polaris Media and Kraft Bank
Assuming the 90 days trading horizon Polaris Media is expected to generate 1.29 times more return on investment than Kraft Bank. However, Polaris Media is 1.29 times more volatile than Kraft Bank Asa. It trades about 0.04 of its potential returns per unit of risk. Kraft Bank Asa is currently generating about 0.01 per unit of risk. If you would invest 5,628 in Polaris Media on September 5, 2024 and sell it today you would earn a total of 2,872 from holding Polaris Media or generate 51.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Polaris Media vs. Kraft Bank Asa
Performance |
| Timeline |
| Polaris Media |
| Kraft Bank Asa |
Polaris Media and Kraft Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polaris Media and Kraft Bank
The main advantage of trading using opposite Polaris Media and Kraft Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polaris Media position performs unexpectedly, Kraft Bank 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 Kraft Bank will offset losses from the drop in Kraft Bank's long position.| Polaris Media vs. Kid ASA | Polaris Media vs. Byggma | Polaris Media vs. American Shipping | Polaris Media vs. Kitron ASA |
| Kraft Bank vs. Morrow Bank ASA | Kraft Bank vs. Napatech AS | Kraft Bank vs. Polaris Media | Kraft Bank vs. Odfjell Drilling |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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