Correlation Between Global Pole and Polar Power

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

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

Diversification Opportunities for Global Pole and Polar Power

-0.28

Correlation Coefficient

Global Pole  Polar Power

Very good diversification

The 3 months correlation between Global and Polar is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Global Pole Trusion and Polar Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Power and Global Pole 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 Global Pole Trusion are associated (or correlated) with Polar Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Power has no effect on the direction of Global Pole i.e., Global Pole and Polar Power go up and down completely randomly.

Pair Corralation between Global Pole and Polar Power

If you would invest  40.00  in Global Pole Trusion on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Global Pole Trusion or generate 0.0% return on investment over 90 days.

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

Global Pole Trusion  vs.  Polar Power

Global Pole Trusion

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Pole Trusion are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Global Pole exhibited solid returns over the last few months and may actually be approaching a breakup point.

Polar Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polar Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Polar Power is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Pole and Polar Power

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

The idea behind Global Pole Trusion and Polar Power 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.