Correlation Between Artemisome and Polar Capital

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

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

Diversification Opportunities for Artemisome and Polar Capital

0.23

Correlation Coefficient

Artemisome  Polar Capital

Modest diversification

The 3 months correlation between Artemisome and Polar is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Artemisome I and Polar Capital Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Capital Funds and Artemisome 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 Artemisome I 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 Funds has no effect on the direction of Artemisome i.e., Artemisome and Polar Capital go up and down completely randomly.

Pair Corralation between Artemisome and Polar Capital

Assuming the 90 days trading horizon Artemisome I is expected to under-perform the Polar Capital. But the fund apears to be less risky and, when comparing its historical volatility, Artemisome I is 1.25 times less risky than Polar Capital. The fund trades about -0.02 of its potential returns per unit of risk. The Polar Capital Funds is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  33,497  in Polar Capital Funds on September 21, 2024 and sell it today you would earn a total of  2,049  from holding Polar Capital Funds or generate 6.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Artemisome I  vs.  Polar Capital Funds

Artemisome I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artemisome I has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent forward-looking signals, Artemisome is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Polar Capital Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polar Capital Funds are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Polar Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Artemisome and Polar Capital

The main advantage of trading using opposite Artemisome and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Artemisome 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 Artemisome I and Polar Capital Funds 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.