Correlation Between Polygon and SALT

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

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

Diversification Opportunities for Polygon and SALT

-0.31

Correlation Coefficient

Polygon  SALT

Very good diversification

The 3 months correlation between Polygon and SALT is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Polygon and SALT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALT 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 SALT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALT has no effect on the direction of Polygon i.e., Polygon and SALT go up and down completely randomly.

Pair Corralation between Polygon and SALT

Assuming the 90 days trading horizon Polygon is expected to generate 5.95 times less return on investment than SALT. In addition to that, Polygon is 11.61 times more volatile than SALT. It trades about 0.01 of its total potential returns per unit of risk. SALT is currently generating about 0.44 per unit of volatility. If you would invest  0.66  in SALT on April 23, 2025 and sell it today you would earn a total of  0.00  from holding SALT or generate 0.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	6.25%
Values	Daily Returns

Polygon  vs.  SALT

Polygon

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polygon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Polygon is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SALT

Risk-Adjusted Performance

Very Strong

Over the last 90 days SALT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady fundamental indicators, SALT may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Polygon and SALT

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

The idea behind Polygon and SALT 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.