Correlation Between Polaris Office and Orbitech

Can any of the company-specific risk be diversified away by investing in both Polaris Office and Orbitech 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 Office and Orbitech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Polaris Office Corp and Orbitech Co, you can compare the effects of market volatilities on Polaris Office and Orbitech 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 Office with a short position of Orbitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polaris Office and Orbitech.

Diversification Opportunities for Polaris Office and Orbitech

-0.26

Correlation Coefficient

Polaris Office  Orbitech

Very good diversification

The 3 months correlation between Polaris and Orbitech is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Office Corp and Orbitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbitech and Polaris Office 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 Office Corp are associated (or correlated) with Orbitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbitech has no effect on the direction of Polaris Office i.e., Polaris Office and Orbitech go up and down completely randomly.

Pair Corralation between Polaris Office and Orbitech

Assuming the 90 days trading horizon Polaris Office Corp is expected to generate 1.09 times more return on investment than Orbitech. However, Polaris Office is 1.09 times more volatile than Orbitech Co. It trades about -0.23 of its potential returns per unit of risk. Orbitech Co is currently generating about -0.3 per unit of risk. If you would invest  650,000  in Polaris Office Corp on September 29, 2024 and sell it today you would lose (120,000) from holding Polaris Office Corp or give up 18.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Polaris Office Corp  vs.  Orbitech Co

Polaris Office Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Orbitech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orbitech Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Polaris Office and Orbitech

The main advantage of trading using opposite Polaris Office and Orbitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polaris Office position performs unexpectedly, Orbitech 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 Orbitech will offset losses from the drop in Orbitech's long position.

The idea behind Polaris Office Corp and Orbitech Co 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.