Correlation Between Byggma and Polaris Media

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

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

Diversification Opportunities for Byggma and Polaris Media

-0.8

Correlation Coefficient

Byggma  Polaris Media

Pay attention - limited upside

The 3 months correlation between Byggma and Polaris is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Byggma and Polaris Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polaris Media and Byggma 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 Byggma 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 Byggma i.e., Byggma and Polaris Media go up and down completely randomly.

Pair Corralation between Byggma and Polaris Media

Assuming the 90 days trading horizon Byggma is expected to under-perform the Polaris Media. In addition to that, Byggma is 1.2 times more volatile than Polaris Media. It trades about -0.05 of its total potential returns per unit of risk. Polaris Media is currently generating about 0.1 per unit of volatility. If you would invest  7,550  in Polaris Media on September 12, 2024 and sell it today you would earn a total of  1,200  from holding Polaris Media or generate 15.89% return on investment over 90 days.

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

Byggma  vs.  Polaris Media

Byggma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Byggma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Polaris Media

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polaris Media are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Polaris Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Byggma and Polaris Media

The main advantage of trading using opposite Byggma and Polaris Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byggma 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 Byggma 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.