Correlation Between Polaris Media and Romsdal Sparebank
Can any of the company-specific risk be diversified away by investing in both Polaris Media and Romsdal Sparebank 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 Romsdal Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polaris Media and Romsdal Sparebank, you can compare the effects of market volatilities on Polaris Media and Romsdal Sparebank 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 Romsdal Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polaris Media and Romsdal Sparebank.
Diversification Opportunities for Polaris Media and Romsdal Sparebank
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Polaris and Romsdal is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Media and Romsdal Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romsdal Sparebank 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 Romsdal Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romsdal Sparebank has no effect on the direction of Polaris Media i.e., Polaris Media and Romsdal Sparebank go up and down completely randomly.
Pair Corralation between Polaris Media and Romsdal Sparebank
Assuming the 90 days trading horizon Polaris Media is expected to under-perform the Romsdal Sparebank. In addition to that, Polaris Media is 1.58 times more volatile than Romsdal Sparebank. It trades about -0.08 of its total potential returns per unit of risk. Romsdal Sparebank is currently generating about 0.01 per unit of volatility. If you would invest 12,354 in Romsdal Sparebank on November 3, 2024 and sell it today you would lose (4.00) from holding Romsdal Sparebank or give up 0.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polaris Media vs. Romsdal Sparebank
Performance |
| Timeline |
| Polaris Media |
| Romsdal Sparebank |
Polaris Media and Romsdal Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polaris Media and Romsdal Sparebank
The main advantage of trading using opposite Polaris Media and Romsdal Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polaris Media position performs unexpectedly, Romsdal Sparebank 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 Romsdal Sparebank will offset losses from the drop in Romsdal Sparebank's long position.| Polaris Media vs. Kid ASA | Polaris Media vs. Byggma | Polaris Media vs. American Shipping | Polaris Media vs. Kitron ASA |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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