Correlation Between Bloomsbury Publishing and Polar Capital

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

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

Diversification Opportunities for Bloomsbury Publishing and Polar Capital

0.09

Correlation Coefficient

Bloomsbury Publishing  Polar Capital

Significant diversification

The 3 months correlation between Bloomsbury and Polar is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bloomsbury Publishing Plc 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 Bloomsbury Publishing 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 Bloomsbury Publishing Plc 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 Bloomsbury Publishing i.e., Bloomsbury Publishing and Polar Capital go up and down completely randomly.

Pair Corralation between Bloomsbury Publishing and Polar Capital

Assuming the 90 days trading horizon Bloomsbury Publishing is expected to generate 1.31 times less return on investment than Polar Capital. In addition to that, Bloomsbury Publishing is 1.41 times more volatile than Polar Capital Technology. It trades about 0.04 of its total potential returns per unit of risk. Polar Capital Technology is currently generating about 0.08 per unit of volatility. If you would invest  19,520  in Polar Capital Technology on December 5, 2024 and sell it today you would earn a total of  12,080  from holding Polar Capital Technology or generate 61.89% return on investment over 90 days.

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

Bloomsbury Publishing Plc  vs.  Polar Capital Technology

Bloomsbury Publishing Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bloomsbury Publishing Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Bloomsbury Publishing and Polar Capital

The main advantage of trading using opposite Bloomsbury Publishing and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomsbury Publishing 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 Bloomsbury Publishing Plc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.