Correlation Between AptaBio Therapeutics and Korea Refractories

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

By analyzing existing cross correlation between AptaBio Therapeutics and Korea Refractories Co, you can compare the effects of market volatilities on AptaBio Therapeutics and Korea Refractories 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 Korea Refractories. Check out your portfolio center. Please also check ongoing floating volatility patterns of AptaBio Therapeutics and Korea Refractories.

Diversification Opportunities for AptaBio Therapeutics and Korea Refractories

0.6

Correlation Coefficient

AptaBio Therapeutics  Korea Refractories

Poor diversification

The 3 months correlation between AptaBio and Korea is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AptaBio Therapeutics and Korea Refractories Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Refractories 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 Korea Refractories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Refractories has no effect on the direction of AptaBio Therapeutics i.e., AptaBio Therapeutics and Korea Refractories go up and down completely randomly.

Pair Corralation between AptaBio Therapeutics and Korea Refractories

Assuming the 90 days trading horizon AptaBio Therapeutics is expected to generate 3.4 times more return on investment than Korea Refractories. However, AptaBio Therapeutics is 3.4 times more volatile than Korea Refractories Co. It trades about 0.2 of its potential returns per unit of risk. Korea Refractories Co is currently generating about 0.3 per unit of risk. If you would invest  630,000  in AptaBio Therapeutics on October 24, 2024 and sell it today you would earn a total of  73,000  from holding AptaBio Therapeutics or generate 11.59% return on investment over 90 days.

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

AptaBio Therapeutics  vs.  Korea Refractories Co

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Korea Refractories

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Refractories Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Korea Refractories is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AptaBio Therapeutics and Korea Refractories

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

The idea behind AptaBio Therapeutics and Korea Refractories 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.