Correlation Between Polygon and Euro Coin

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

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

Diversification Opportunities for Polygon and Euro Coin

-0.62

Correlation Coefficient

Polygon  Euro Coin

Excellent diversification

The 3 months correlation between Polygon and Euro is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Polygon and Euro Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Coin and Polygon 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 Polygon are associated (or correlated) with Euro Coin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Coin has no effect on the direction of Polygon i.e., Polygon and Euro Coin go up and down completely randomly.

Pair Corralation between Polygon and Euro Coin

Assuming the 90 days trading horizon Polygon is expected to generate 5.28 times more return on investment than Euro Coin. However, Polygon is 5.28 times more volatile than Euro Coin. It trades about 0.05 of its potential returns per unit of risk. Euro Coin is currently generating about 0.05 per unit of risk. If you would invest  22.00  in Polygon on April 22, 2025 and sell it today you would earn a total of  2.00  from holding Polygon or generate 9.09% return on investment over 90 days.

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

Polygon  vs.  Euro Coin

Polygon

Risk-Adjusted Performance

Insignificant

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

Euro Coin

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Euro Coin are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Euro Coin is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Polygon and Euro Coin

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

The idea behind Polygon and Euro Coin 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.