Correlation Between Alliance Financial and Apex Healthcare

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

By analyzing existing cross correlation between Alliance Financial Group and Apex Healthcare Bhd, you can compare the effects of market volatilities on Alliance Financial and Apex Healthcare 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 Alliance Financial with a short position of Apex Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Financial and Apex Healthcare.

Diversification Opportunities for Alliance Financial and Apex Healthcare

-0.1

Correlation Coefficient

Alliance Financial  Apex Healthcare

Good diversification

The 3 months correlation between Alliance and Apex is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Financial Group and Apex Healthcare Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apex Healthcare Bhd and Alliance Financial 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 Alliance Financial Group are associated (or correlated) with Apex Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apex Healthcare Bhd has no effect on the direction of Alliance Financial i.e., Alliance Financial and Apex Healthcare go up and down completely randomly.

Pair Corralation between Alliance Financial and Apex Healthcare

Assuming the 90 days trading horizon Alliance Financial Group is expected to generate 0.98 times more return on investment than Apex Healthcare. However, Alliance Financial Group is 1.02 times less risky than Apex Healthcare. It trades about 0.08 of its potential returns per unit of risk. Apex Healthcare Bhd is currently generating about -0.24 per unit of risk. If you would invest  483.00  in Alliance Financial Group on December 24, 2024 and sell it today you would earn a total of  26.00  from holding Alliance Financial Group or generate 5.38% return on investment over 90 days.

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

Alliance Financial Group  vs.  Apex Healthcare Bhd

Alliance Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Financial Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Alliance Financial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Apex Healthcare Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apex Healthcare Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Alliance Financial and Apex Healthcare

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

The idea behind Alliance Financial Group and Apex Healthcare Bhd 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.