Correlation Between American Shipping and Polaris Media

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

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

Diversification Opportunities for American Shipping and Polaris Media

-0.08

Correlation Coefficient

American Shipping  Polaris Media

Good diversification

The 3 months correlation between American and Polaris is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding American Shipping and Polaris Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polaris Media and American Shipping 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 American Shipping are associated (or correlated) with Polaris Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polaris Media has no effect on the direction of American Shipping i.e., American Shipping and Polaris Media go up and down completely randomly.

Pair Corralation between American Shipping and Polaris Media

Assuming the 90 days trading horizon American Shipping is expected to generate 1.11 times more return on investment than Polaris Media. However, American Shipping is 1.11 times more volatile than Polaris Media. It trades about 0.13 of its potential returns per unit of risk. Polaris Media is currently generating about 0.02 per unit of risk. If you would invest  2,313  in American Shipping on December 31, 2024 and sell it today you would earn a total of  457.00  from holding American Shipping or generate 19.76% return on investment over 90 days.

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

American Shipping  vs.  Polaris Media

American Shipping

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Shipping are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, American Shipping disclosed solid returns over the last few months and may actually be approaching a breakup point.

Polaris Media

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Polaris Media are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Polaris Media 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 American Shipping and Polaris Media

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

The idea behind American Shipping and Polaris Media 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.