Correlation Between Polar Power and Electro Sensors

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

By analyzing existing cross correlation between Polar Power and Electro Sensors, you can compare the effects of market volatilities on Polar Power and Electro Sensors 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 Electro Sensors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Power and Electro Sensors.

Diversification Opportunities for Polar Power and Electro Sensors

0.56

Correlation Coefficient

Polar Power  Electro Sensors

Very weak diversification

The 3 months correlation between Polar and Electro is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Polar Power and Electro Sensors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro Sensors 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 Electro Sensors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro Sensors has no effect on the direction of Polar Power i.e., Polar Power and Electro Sensors go up and down completely randomly.

Pair Corralation between Polar Power and Electro Sensors

Given the investment horizon of 90 days Polar Power is expected to under-perform the Electro Sensors. But the stock apears to be less risky and, when comparing its historical volatility, Polar Power is 1.52 times less risky than Electro Sensors. The stock trades about -0.01 of its potential returns per unit of risk. The Electro Sensors is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  390.00  in Electro Sensors on May 7, 2025 and sell it today you would earn a total of  33.00  from holding Electro Sensors or generate 8.46% return on investment over 90 days.

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

Polar Power  vs.  Electro Sensors

Polar Power

Risk-Adjusted Performance

Weakest

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Electro Sensors

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Electro Sensors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Electro Sensors exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polar Power and Electro Sensors

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

The idea behind Polar Power and Electro Sensors 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.