Correlation Between Sydbank and Polar Capital

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

By analyzing existing cross correlation between Sydbank and Polar Capital Technology, you can compare the effects of market volatilities on Sydbank and Polar Capital 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 Sydbank with a short position of Polar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sydbank and Polar Capital.

Diversification Opportunities for Sydbank and Polar Capital

0.89

Correlation Coefficient

Sydbank  Polar Capital

Very poor diversification

The 3 months correlation between Sydbank and Polar is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sydbank and Polar Capital Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Capital Technology and Sydbank 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 Sydbank are associated (or correlated) with Polar Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Capital Technology has no effect on the direction of Sydbank i.e., Sydbank and Polar Capital go up and down completely randomly.

Pair Corralation between Sydbank and Polar Capital

Assuming the 90 days trading horizon Sydbank is expected to generate 1.03 times less return on investment than Polar Capital. In addition to that, Sydbank is 1.17 times more volatile than Polar Capital Technology. It trades about 0.09 of its total potential returns per unit of risk. Polar Capital Technology is currently generating about 0.11 per unit of volatility. If you would invest  25,400  in Polar Capital Technology on October 6, 2024 and sell it today you would earn a total of  10,300  from holding Polar Capital Technology or generate 40.55% return on investment over 90 days.

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

Sydbank  vs.  Polar Capital Technology

Sydbank

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Sydbank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Polar Capital Technology

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Polar Capital Technology are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Polar Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sydbank and Polar Capital

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

The idea behind Sydbank and Polar Capital 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.