Correlation Between Polight ASA and River Tech

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

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

Diversification Opportunities for Polight ASA and River Tech

0.23

Correlation Coefficient

Polight ASA  River Tech

Modest diversification

The 3 months correlation between Polight and River is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Polight ASA and River Tech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on River Tech plc 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 River Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of River Tech plc has no effect on the direction of Polight ASA i.e., Polight ASA and River Tech go up and down completely randomly.

Pair Corralation between Polight ASA and River Tech

Assuming the 90 days trading horizon Polight ASA is expected to generate 2.04 times more return on investment than River Tech. However, Polight ASA is 2.04 times more volatile than River Tech plc. It trades about 0.03 of its potential returns per unit of risk. River Tech plc is currently generating about 0.05 per unit of risk. If you would invest  408.00  in Polight ASA on April 24, 2025 and sell it today you would earn a total of  10.00  from holding Polight ASA or generate 2.45% return on investment over 90 days.

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

Polight ASA  vs.  River Tech plc

Polight ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Polight ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Polight ASA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

River Tech plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in River Tech plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, River Tech may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Polight ASA and River Tech

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

The idea behind Polight ASA and River Tech plc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..