Correlation Between APro and Stic Investments

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

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

Diversification Opportunities for APro and Stic Investments

-0.02

Correlation Coefficient

APro  Stic Investments

Good diversification

The 3 months correlation between APro and Stic is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding APro Co and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments and APro 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 APro Co are associated (or correlated) with Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of APro i.e., APro and Stic Investments go up and down completely randomly.

Pair Corralation between APro and Stic Investments

Assuming the 90 days trading horizon APro is expected to generate 3.64 times less return on investment than Stic Investments. In addition to that, APro is 1.07 times more volatile than Stic Investments. It trades about 0.01 of its total potential returns per unit of risk. Stic Investments is currently generating about 0.05 per unit of volatility. If you would invest  863,000  in Stic Investments on December 30, 2024 and sell it today you would earn a total of  50,000  from holding Stic Investments or generate 5.79% return on investment over 90 days.

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

APro Co  vs.  Stic Investments

APro

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in APro Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, APro is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stic Investments

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stic Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Stic Investments may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with APro and Stic Investments

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

The idea behind APro Co and Stic Investments 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..