Correlation Between Polar Capital and GreenX Metals

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

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

Diversification Opportunities for Polar Capital and GreenX Metals

-0.3

Correlation Coefficient

Polar Capital  GreenX Metals

Very good diversification

The 3 months correlation between Polar and GreenX is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals and Polar Capital 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 Polar Capital Technology are associated (or correlated) with GreenX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenX Metals has no effect on the direction of Polar Capital i.e., Polar Capital and GreenX Metals go up and down completely randomly.

Pair Corralation between Polar Capital and GreenX Metals

Assuming the 90 days trading horizon Polar Capital Technology is expected to under-perform the GreenX Metals. But the stock apears to be less risky and, when comparing its historical volatility, Polar Capital Technology is 1.14 times less risky than GreenX Metals. The stock trades about -0.1 of its potential returns per unit of risk. The GreenX Metals is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,400  in GreenX Metals on December 21, 2024 and sell it today you would earn a total of  900.00  from holding GreenX Metals or generate 26.47% return on investment over 90 days.

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

Polar Capital Technology  vs.  GreenX Metals

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.

GreenX Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GreenX Metals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, GreenX Metals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polar Capital and GreenX Metals

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

The idea behind Polar Capital Technology and GreenX Metals 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.