Correlation Between Polar Capital and Artemisome

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

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

Diversification Opportunities for Polar Capital and Artemisome

0.33

Correlation Coefficient

Polar Capital  Artemisome

Weak diversification

The 3 months correlation between Polar and Artemisome is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Funds and Artemisome I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Artemisome I and Polar Capital 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 Polar Capital Funds are associated (or correlated) with Artemisome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Artemisome I has no effect on the direction of Polar Capital i.e., Polar Capital and Artemisome go up and down completely randomly.

Pair Corralation between Polar Capital and Artemisome

Assuming the 90 days trading horizon Polar Capital Funds is expected to generate 1.01 times more return on investment than Artemisome. However, Polar Capital is 1.01 times more volatile than Artemisome I. It trades about 0.1 of its potential returns per unit of risk. Artemisome I is currently generating about -0.09 per unit of risk. If you would invest  35,362  in Polar Capital Funds on October 1, 2024 and sell it today you would earn a total of  337.00  from holding Polar Capital Funds or generate 0.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Polar Capital Funds  vs.  Artemisome I

Polar Capital Funds

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polar Capital Funds are ranked lower than 7 (%) 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.

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.

Pair Trading with Polar Capital and Artemisome

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

The idea behind Polar Capital Funds and Artemisome I 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.