Correlation Between PTRA and Polestar Automotive

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Can any of the company-specific risk be diversified away by investing in both PTRA 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 PTRA and Polestar Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PTRA and Polestar Automotive Holding, you can compare the effects of market volatilities on PTRA 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 PTRA with a short position of Polestar Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTRA and Polestar Automotive.

Diversification Opportunities for PTRA and Polestar Automotive

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between PTRA and Polestar is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding PTRA and Polestar Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polestar Automotive and PTRA 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 PTRA 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 PTRA i.e., PTRA and Polestar Automotive go up and down completely randomly.

Pair Corralation between PTRA and Polestar Automotive

Given the investment horizon of 90 days PTRA is expected to under-perform the Polestar Automotive. In addition to that, PTRA is 1.45 times more volatile than Polestar Automotive Holding. It trades about -0.04 of its total potential returns per unit of risk. Polestar Automotive Holding is currently generating about -0.04 per unit of volatility. If you would invest  555.00  in Polestar Automotive Holding on August 31, 2024 and sell it today you would lose (441.00) from holding Polestar Automotive Holding or give up 79.46% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy28.45%
ValuesDaily Returns

PTRA  vs.  Polestar Automotive Holding

 Performance 
       Timeline  
PTRA 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days PTRA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PTRA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Polestar Automotive 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Polestar Automotive Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

PTRA and Polestar Automotive Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PTRA and Polestar Automotive

The main advantage of trading using opposite PTRA and Polestar Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PTRA 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.
The idea behind PTRA and Polestar Automotive Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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