Correlation Between Polar Capital and GSTechnologies

Can any of the company-specific risk be diversified away by investing in both Polar Capital and GSTechnologies 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 GSTechnologies 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 GSTechnologies, you can compare the effects of market volatilities on Polar Capital and GSTechnologies 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 GSTechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and GSTechnologies.

Diversification Opportunities for Polar Capital and GSTechnologies

0.28

Correlation Coefficient

Polar Capital  GSTechnologies

Modest diversification

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

Pair Corralation between Polar Capital and GSTechnologies

Assuming the 90 days trading horizon Polar Capital Technology is expected to under-perform the GSTechnologies. But the stock apears to be less risky and, when comparing its historical volatility, Polar Capital Technology is 3.7 times less risky than GSTechnologies. The stock trades about -0.06 of its potential returns per unit of risk. The GSTechnologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  220.00  in GSTechnologies on December 26, 2024 and sell it today you would lose (7.00) from holding GSTechnologies or give up 3.18% of portfolio value over 90 days.

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

Polar Capital Technology  vs.  GSTechnologies

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.

GSTechnologies

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GSTechnologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, GSTechnologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polar Capital and GSTechnologies

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

The idea behind Polar Capital Technology and GSTechnologies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.