Correlation Between Polaris Media and Nordhealth

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

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

Diversification Opportunities for Polaris Media and Nordhealth

-0.04

Correlation Coefficient

Polaris Media  Nordhealth

Good diversification

The 3 months correlation between Polaris and Nordhealth is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Media and Nordhealth AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordhealth AS and Polaris Media 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 Polaris Media are associated (or correlated) with Nordhealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordhealth AS has no effect on the direction of Polaris Media i.e., Polaris Media and Nordhealth go up and down completely randomly.

Pair Corralation between Polaris Media and Nordhealth

Assuming the 90 days trading horizon Polaris Media is expected to generate 0.63 times more return on investment than Nordhealth. However, Polaris Media is 1.59 times less risky than Nordhealth. It trades about 0.0 of its potential returns per unit of risk. Nordhealth AS is currently generating about -0.02 per unit of risk. If you would invest  8,500  in Polaris Media on December 23, 2024 and sell it today you would lose (200.00) from holding Polaris Media or give up 2.35% of portfolio value over 90 days.

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

Polaris Media  vs.  Nordhealth AS

Polaris Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polaris Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Polaris Media is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Nordhealth AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordhealth AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Nordhealth is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Polaris Media and Nordhealth

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

The idea behind Polaris Media and Nordhealth AS 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.