Correlation Between Polar Power and ABB
Can any of the company-specific risk be diversified away by investing in both Polar Power and ABB 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 ABB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polar Power and ABB Ltd ADR, you can compare the effects of market volatilities on Polar Power and ABB 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 ABB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Power and ABB.
Diversification Opportunities for Polar Power and ABB
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Polar and ABB is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Polar Power and ABB Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB Ltd ADR 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 ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB Ltd ADR has no effect on the direction of Polar Power i.e., Polar Power and ABB go up and down completely randomly.
Pair Corralation between Polar Power and ABB
If you would invest 3,900 in ABB Ltd ADR on January 25, 2024 and sell it today you would earn a total of 0.00 from holding ABB Ltd ADR or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 4.55% |
Values | Daily Returns |
Polar Power vs. ABB Ltd ADR
Performance |
Timeline |
Polar Power |
ABB Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Polar Power and ABB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Polar Power and ABB
The main advantage of trading using opposite Polar Power and ABB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Power position performs unexpectedly, ABB 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 ABB will offset losses from the drop in ABB's long position.Polar Power vs. Enovix Corp | Polar Power vs. FREYR Battery SA | Polar Power vs. Pioneer Power Solutions | Polar Power vs. Ocean Power Technologies |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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