Correlation Between Polar Capital and Technology Minerals

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

Diversification Opportunities for Polar Capital and Technology Minerals

0.23

Correlation Coefficient

Polar Capital  Technology Minerals

Modest diversification

The 3 months correlation between Polar and Technology is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Technology Minerals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Minerals PLC 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 Technology Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Minerals PLC has no effect on the direction of Polar Capital i.e., Polar Capital and Technology Minerals go up and down completely randomly.

Pair Corralation between Polar Capital and Technology Minerals

Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.24 times more return on investment than Technology Minerals. However, Polar Capital Technology is 4.09 times less risky than Technology Minerals. It trades about -0.11 of its potential returns per unit of risk. Technology Minerals PLC is currently generating about -0.1 per unit of risk. If you would invest  35,100  in Polar Capital Technology on December 24, 2024 and sell it today you would lose (4,400) from holding Polar Capital Technology or give up 12.54% 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.  Technology Minerals PLC

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.

Technology Minerals PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Technology Minerals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Polar Capital and Technology Minerals

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

The idea behind Polar Capital Technology and Technology Minerals PLC 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.