Correlation Between Apollo Medical and Strategic Education

Can any of the company-specific risk be diversified away by investing in both Apollo Medical and Strategic Education 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 Strategic Education 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 Strategic Education, you can compare the effects of market volatilities on Apollo Medical and Strategic Education 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 Strategic Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Medical and Strategic Education.

Diversification Opportunities for Apollo Medical and Strategic Education

0.71

Correlation Coefficient

Apollo Medical  Strategic Education

Poor diversification

The 3 months correlation between Apollo and Strategic is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Medical Holdings and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education 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 Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of Apollo Medical i.e., Apollo Medical and Strategic Education go up and down completely randomly.

Pair Corralation between Apollo Medical and Strategic Education

Assuming the 90 days horizon Apollo Medical Holdings is expected to generate 1.05 times more return on investment than Strategic Education. However, Apollo Medical is 1.05 times more volatile than Strategic Education. It trades about -0.06 of its potential returns per unit of risk. Strategic Education is currently generating about -0.07 per unit of risk. If you would invest  3,160  in Apollo Medical Holdings on December 27, 2024 and sell it today you would lose (360.00) from holding Apollo Medical Holdings or give up 11.39% of portfolio value over 90 days.

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

Apollo Medical Holdings  vs.  Strategic Education

Apollo Medical Holdings

Risk-Adjusted Performance

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.

Strategic Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategic Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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 Apollo Medical and Strategic Education

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

The idea behind Apollo Medical Holdings and Strategic Education 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.