Correlation Between Polight ASA and Ocean Sun

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

By analyzing existing cross correlation between Polight ASA and Ocean Sun As, you can compare the effects of market volatilities on Polight ASA and Ocean Sun 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 Polight ASA with a short position of Ocean Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polight ASA and Ocean Sun.

Diversification Opportunities for Polight ASA and Ocean Sun

0.09

Correlation Coefficient

Polight ASA  Ocean Sun

Significant diversification

The 3 months correlation between Polight and Ocean is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Polight ASA and Ocean Sun As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Sun As and Polight ASA 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 Polight ASA are associated (or correlated) with Ocean Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Sun As has no effect on the direction of Polight ASA i.e., Polight ASA and Ocean Sun go up and down completely randomly.

Pair Corralation between Polight ASA and Ocean Sun

Assuming the 90 days trading horizon Polight ASA is expected to generate 0.61 times more return on investment than Ocean Sun. However, Polight ASA is 1.64 times less risky than Ocean Sun. It trades about 0.08 of its potential returns per unit of risk. Ocean Sun As is currently generating about 0.03 per unit of risk. If you would invest  415.00  in Polight ASA on September 7, 2024 and sell it today you would earn a total of  76.00  from holding Polight ASA or generate 18.31% return on investment over 90 days.

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

Polight ASA  vs.  Ocean Sun As

Polight ASA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Polight ASA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Polight ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Ocean Sun As

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ocean Sun As are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Ocean Sun disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polight ASA and Ocean Sun

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

The idea behind Polight ASA and Ocean Sun 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.