Correlation Between King Resources and Polar Power

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

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

Diversification Opportunities for King Resources and Polar Power

-0.02

Correlation Coefficient

King Resources  Polar Power

Good diversification

The 3 months correlation between King and Polar is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding King Resources and Polar Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Power and King Resources 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 King Resources 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 King Resources i.e., King Resources and Polar Power go up and down completely randomly.

Pair Corralation between King Resources and Polar Power

Given the investment horizon of 90 days King Resources is expected to generate 5.19 times more return on investment than Polar Power. However, King Resources is 5.19 times more volatile than Polar Power. It trades about 0.18 of its potential returns per unit of risk. Polar Power is currently generating about 0.01 per unit of risk. If you would invest  0.01  in King Resources on September 15, 2024 and sell it today you would earn a total of  0.01  from holding King Resources or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

King Resources  vs.  Polar Power

King Resources

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in King Resources are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, King Resources reported 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 King Resources and Polar Power

The main advantage of trading using opposite King Resources and Polar Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if King Resources 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 King Resources 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.