Correlation Between BH Macro and Polar Capital

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

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

Diversification Opportunities for BH Macro and Polar Capital

0.69

Correlation Coefficient

BH Macro  Polar Capital

Poor diversification

The 3 months correlation between BHMU and Polar is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BH Macro Limited 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 BH Macro 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 BH Macro Limited 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 BH Macro i.e., BH Macro and Polar Capital go up and down completely randomly.

Pair Corralation between BH Macro and Polar Capital

Assuming the 90 days trading horizon BH Macro Limited is expected to generate 0.54 times more return on investment than Polar Capital. However, BH Macro Limited is 1.86 times less risky than Polar Capital. It trades about -0.14 of its potential returns per unit of risk. Polar Capital Technology is currently generating about -0.11 per unit of risk. If you would invest  417.00  in BH Macro Limited on December 30, 2024 and sell it today you would lose (39.00) from holding BH Macro Limited or give up 9.35% of portfolio value over 90 days.

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

BH Macro Limited  vs.  Polar Capital Technology

BH Macro Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days BH Macro Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Polar Capital Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polar Capital Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with BH Macro and Polar Capital

The main advantage of trading using opposite BH Macro and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BH Macro 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 BH Macro Limited 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.