Correlation Between Apex Biotechnology and Sports Gear

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

By analyzing existing cross correlation between Apex Biotechnology Corp and Sports Gear Co, you can compare the effects of market volatilities on Apex Biotechnology and Sports Gear 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 Apex Biotechnology with a short position of Sports Gear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apex Biotechnology and Sports Gear.

Diversification Opportunities for Apex Biotechnology and Sports Gear

-0.7

Correlation Coefficient

Apex Biotechnology  Sports Gear

Excellent diversification

The 3 months correlation between Apex and Sports is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Apex Biotechnology Corp and Sports Gear Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sports Gear and Apex Biotechnology 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 Apex Biotechnology Corp are associated (or correlated) with Sports Gear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sports Gear has no effect on the direction of Apex Biotechnology i.e., Apex Biotechnology and Sports Gear go up and down completely randomly.

Pair Corralation between Apex Biotechnology and Sports Gear

Assuming the 90 days trading horizon Apex Biotechnology Corp is expected to generate 0.4 times more return on investment than Sports Gear. However, Apex Biotechnology Corp is 2.49 times less risky than Sports Gear. It trades about -0.05 of its potential returns per unit of risk. Sports Gear Co is currently generating about -0.05 per unit of risk. If you would invest  2,790  in Apex Biotechnology Corp on September 16, 2024 and sell it today you would lose (40.00) from holding Apex Biotechnology Corp or give up 1.43% of portfolio value over 90 days.

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

Apex Biotechnology Corp  vs.  Sports Gear Co

Apex Biotechnology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apex Biotechnology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Sports Gear

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sports Gear Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sports Gear showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apex Biotechnology and Sports Gear

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

The idea behind Apex Biotechnology Corp and Sports Gear Co 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.