Correlation Between AptaBio Therapeutics and Namyang Dairy

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

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

Diversification Opportunities for AptaBio Therapeutics and Namyang Dairy

-0.23

Correlation Coefficient

AptaBio Therapeutics  Namyang Dairy

Very good diversification

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

Pair Corralation between AptaBio Therapeutics and Namyang Dairy

Assuming the 90 days trading horizon AptaBio Therapeutics is expected to generate 1.1 times more return on investment than Namyang Dairy. However, AptaBio Therapeutics is 1.1 times more volatile than Namyang Dairy. It trades about -0.08 of its potential returns per unit of risk. Namyang Dairy is currently generating about -0.31 per unit of risk. If you would invest  661,000  in AptaBio Therapeutics on October 4, 2024 and sell it today you would lose (34,000) from holding AptaBio Therapeutics or give up 5.14% of portfolio value over 90 days.

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

AptaBio Therapeutics  vs.  Namyang Dairy

AptaBio Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AptaBio Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Namyang Dairy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Namyang Dairy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Namyang Dairy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AptaBio Therapeutics and Namyang Dairy

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

The idea behind AptaBio Therapeutics and Namyang Dairy 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.