Correlation Between Polaris Office and Aniplus

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

Diversification Opportunities for Polaris Office and Aniplus

0.39

Correlation Coefficient

Polaris Office  Aniplus

Weak diversification

The 3 months correlation between Polaris and Aniplus is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Office Corp and Aniplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aniplus 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 Aniplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aniplus has no effect on the direction of Polaris Office i.e., Polaris Office and Aniplus go up and down completely randomly.

Pair Corralation between Polaris Office and Aniplus

Assuming the 90 days trading horizon Polaris Office is expected to generate 6.67 times less return on investment than Aniplus. In addition to that, Polaris Office is 1.8 times more volatile than Aniplus. It trades about 0.01 of its total potential returns per unit of risk. Aniplus is currently generating about 0.12 per unit of volatility. If you would invest  264,500  in Aniplus on December 24, 2024 and sell it today you would earn a total of  35,000  from holding Aniplus or generate 13.23% return on investment over 90 days.

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

Polaris Office Corp  vs.  Aniplus

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.

Aniplus

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aniplus are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Aniplus sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polaris Office and Aniplus

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

The idea behind Polaris Office Corp and Aniplus 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.