Correlation Between Polar Power and Ads Tec

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

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

Diversification Opportunities for Polar Power and Ads Tec

0.54

Correlation Coefficient

Polar Power  Ads Tec

Very weak diversification

The 3 months correlation between Polar and Ads is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Polar Power and Ads Tec Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ads Tec Energy and Polar Power 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 Power are associated (or correlated) with Ads Tec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ads Tec Energy has no effect on the direction of Polar Power i.e., Polar Power and Ads Tec go up and down completely randomly.

Pair Corralation between Polar Power and Ads Tec

Given the investment horizon of 90 days Polar Power is expected to generate 3.2 times more return on investment than Ads Tec. However, Polar Power is 3.2 times more volatile than Ads Tec Energy. It trades about 0.01 of its potential returns per unit of risk. Ads Tec Energy is currently generating about 0.03 per unit of risk. If you would invest  278.00  in Polar Power on December 27, 2024 and sell it today you would lose (24.00) from holding Polar Power or give up 8.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Polar Power  vs.  Ads Tec Energy

Polar Power

Risk-Adjusted Performance

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.

Ads Tec Energy

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ads Tec Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Ads Tec is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Polar Power and Ads Tec

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

The idea behind Polar Power and Ads Tec Energy 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.