Correlation Between Barunson Entertainment and APS Holdings

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

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

Diversification Opportunities for Barunson Entertainment and APS Holdings

0.07

Correlation Coefficient

Barunson Entertainment  APS Holdings

Significant diversification

The 3 months correlation between Barunson and APS is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Barunson Entertainment Arts and APS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Holdings and Barunson Entertainment 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 Barunson Entertainment Arts are associated (or correlated) with APS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Holdings has no effect on the direction of Barunson Entertainment i.e., Barunson Entertainment and APS Holdings go up and down completely randomly.

Pair Corralation between Barunson Entertainment and APS Holdings

Assuming the 90 days trading horizon Barunson Entertainment Arts is expected to under-perform the APS Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Barunson Entertainment Arts is 1.24 times less risky than APS Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The APS Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  561,000  in APS Holdings on December 2, 2024 and sell it today you would earn a total of  53,000  from holding APS Holdings or generate 9.45% return on investment over 90 days.

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

Barunson Entertainment Arts  vs.  APS Holdings

Barunson Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barunson Entertainment Arts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Barunson Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

APS Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in APS Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, APS Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barunson Entertainment and APS Holdings

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

The idea behind Barunson Entertainment Arts and APS Holdings 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.