Correlation Between Apollo Medical and Smurfit Kappa

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

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

Diversification Opportunities for Apollo Medical and Smurfit Kappa

0.0

Correlation Coefficient

Apollo Medical  Smurfit Kappa

Pay attention - limited upside

The 3 months correlation between Apollo and Smurfit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Medical Holdings and Smurfit Kappa Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smurfit Kappa Group and Apollo Medical 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 Apollo Medical Holdings are associated (or correlated) with Smurfit Kappa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smurfit Kappa Group has no effect on the direction of Apollo Medical i.e., Apollo Medical and Smurfit Kappa go up and down completely randomly.

Pair Corralation between Apollo Medical and Smurfit Kappa

Assuming the 90 days horizon Apollo Medical Holdings is expected to under-perform the Smurfit Kappa. But the stock apears to be less risky and, when comparing its historical volatility, Apollo Medical Holdings is 1.62 times less risky than Smurfit Kappa. The stock trades about -1.37 of its potential returns per unit of risk. The Smurfit Kappa Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,120  in Smurfit Kappa Group on October 6, 2024 and sell it today you would earn a total of  50.00  from holding Smurfit Kappa Group or generate 0.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Apollo Medical Holdings  vs.  Smurfit Kappa Group

Apollo Medical Holdings

Risk-Adjusted Performance

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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 unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Smurfit Kappa Group

Risk-Adjusted Performance

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Very Weak

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

Pair Trading with Apollo Medical and Smurfit Kappa

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

The idea behind Apollo Medical Holdings and Smurfit Kappa Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.