Correlation Between Polaris Office and Puloon Technology

Can any of the company-specific risk be diversified away by investing in both Polaris Office and Puloon Technology 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 Puloon Technology 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 Puloon Technology, you can compare the effects of market volatilities on Polaris Office and Puloon Technology 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 Puloon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polaris Office and Puloon Technology.

Diversification Opportunities for Polaris Office and Puloon Technology

0.48

Correlation Coefficient

Polaris Office  Puloon Technology

Very weak diversification

The 3 months correlation between Polaris and Puloon is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Office Corp and Puloon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puloon Technology 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 Puloon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puloon Technology has no effect on the direction of Polaris Office i.e., Polaris Office and Puloon Technology go up and down completely randomly.

Pair Corralation between Polaris Office and Puloon Technology

Assuming the 90 days trading horizon Polaris Office is expected to generate 1.2 times less return on investment than Puloon Technology. In addition to that, Polaris Office is 1.19 times more volatile than Puloon Technology. It trades about 0.07 of its total potential returns per unit of risk. Puloon Technology is currently generating about 0.1 per unit of volatility. If you would invest  625,250  in Puloon Technology on October 21, 2024 and sell it today you would earn a total of  131,750  from holding Puloon Technology or generate 21.07% return on investment over 90 days.

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

Polaris Office Corp  vs.  Puloon Technology

Polaris Office Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Polaris Office Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Polaris Office sustained solid returns over the last few months and may actually be approaching a breakup point.

Puloon Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Puloon Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Puloon Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polaris Office and Puloon Technology

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

The idea behind Polaris Office Corp and Puloon Technology 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.