Correlation Between Ambrus Core and Polen Smid

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

By analyzing existing cross correlation between Ambrus Core Bond and Polen Smid, you can compare the effects of market volatilities on Ambrus Core and Polen Smid 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 Ambrus Core with a short position of Polen Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambrus Core and Polen Smid.

Diversification Opportunities for Ambrus Core and Polen Smid

-0.15

Correlation Coefficient

Ambrus Core  Polen Smid

Good diversification

The 3 months correlation between Ambrus and Polen is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ambrus Core Bond and Polen Smid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Smid and Ambrus Core 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 Ambrus Core Bond are associated (or correlated) with Polen Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Smid has no effect on the direction of Ambrus Core i.e., Ambrus Core and Polen Smid go up and down completely randomly.

Pair Corralation between Ambrus Core and Polen Smid

Assuming the 90 days horizon Ambrus Core Bond is expected to generate 0.13 times more return on investment than Polen Smid. However, Ambrus Core Bond is 7.61 times less risky than Polen Smid. It trades about 0.31 of its potential returns per unit of risk. Polen Smid is currently generating about -0.34 per unit of risk. If you would invest  990.00  in Ambrus Core Bond on December 4, 2024 and sell it today you would earn a total of  11.00  from holding Ambrus Core Bond or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Ambrus Core Bond  vs.  Polen Smid

Ambrus Core Bond

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ambrus Core Bond are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Ambrus Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Polen Smid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polen Smid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Ambrus Core and Polen Smid

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

The idea behind Ambrus Core Bond and Polen Smid 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.