Correlation Between ALD SA and Apollo Medical

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

By analyzing existing cross correlation between ALD SA and Apollo Medical Holdings, you can compare the effects of market volatilities on ALD SA and Apollo Medical 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 ALD SA with a short position of Apollo Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALD SA and Apollo Medical.

Diversification Opportunities for ALD SA and Apollo Medical

-0.23

Correlation Coefficient

ALD SA  Apollo Medical

Very good diversification

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

Pair Corralation between ALD SA and Apollo Medical

Assuming the 90 days horizon ALD SA is expected to generate 1.26 times more return on investment than Apollo Medical. However, ALD SA is 1.26 times more volatile than Apollo Medical Holdings. It trades about 0.1 of its potential returns per unit of risk. Apollo Medical Holdings is currently generating about -0.6 per unit of risk. If you would invest  596.00  in ALD SA on September 27, 2024 and sell it today you would earn a total of  25.00  from holding ALD SA or generate 4.19% return on investment over 90 days.

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

ALD SA  vs.  Apollo Medical Holdings

ALD SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALD SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ALD SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Apollo Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Medical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ALD SA and Apollo Medical

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

The idea behind ALD SA and Apollo Medical Holdings 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.