Correlation Between Polar Power and King Resources
Can any of the company-specific risk be diversified away by investing in both Polar Power and King Resources 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 Polar Power and King Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polar Power and King Resources, you can compare the effects of market volatilities on Polar Power and King Resources 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 Polar Power with a short position of King Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Power and King Resources.
Diversification Opportunities for Polar Power and King Resources
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Polar and King is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Polar Power and King Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Resources and Polar Power 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 Polar Power are associated (or correlated) with King Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Resources has no effect on the direction of Polar Power i.e., Polar Power and King Resources go up and down completely randomly.
Pair Corralation between Polar Power and King Resources
Given the investment horizon of 90 days Polar Power is expected to under-perform the King Resources. But the stock apears to be less risky and, when comparing its historical volatility, Polar Power is 4.5 times less risky than King Resources. The stock trades about -0.02 of its potential returns per unit of risk. The King Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.04 in King Resources on September 2, 2024 and sell it today you would lose (0.02) from holding King Resources or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Polar Power vs. King Resources
Performance |
| Timeline |
| Polar Power |
| King Resources |
Polar Power and King Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Power and King Resources
The main advantage of trading using opposite Polar Power and King Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Power position performs unexpectedly, King Resources 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 King Resources will offset losses from the drop in King Resources' long position.| Polar Power vs. CBAK Energy Technology | Polar Power vs. Ocean Power Technologies | Polar Power vs. Enersys | Polar Power vs. Flux Power Holdings |
| King Resources vs. Generation Alpha | King Resources vs. Polar Power | King Resources vs. Ozop Surgical Corp | King Resources vs. NeoVolta Common Stock |
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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