Correlation Between Polaris Office and Cube Entertainment

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

Diversification Opportunities for Polaris Office and Cube Entertainment

0.47

Correlation Coefficient

Polaris Office  Cube Entertainment

Very weak diversification

The 3 months correlation between Polaris and Cube is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Office Corp and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment 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 Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of Polaris Office i.e., Polaris Office and Cube Entertainment go up and down completely randomly.

Pair Corralation between Polaris Office and Cube Entertainment

Assuming the 90 days trading horizon Polaris Office Corp is expected to under-perform the Cube Entertainment. In addition to that, Polaris Office is 1.29 times more volatile than Cube Entertainment. It trades about -0.01 of its total potential returns per unit of risk. Cube Entertainment is currently generating about 0.01 per unit of volatility. If you would invest  1,674,000  in Cube Entertainment on December 3, 2024 and sell it today you would lose (25,000) from holding Cube Entertainment or give up 1.49% of portfolio value over 90 days.

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

Polaris Office Corp  vs.  Cube Entertainment

Polaris Office Corp

Risk-Adjusted Performance

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.

Cube Entertainment

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Polaris Office and Cube Entertainment

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

The idea behind Polaris Office Corp and Cube Entertainment 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..