Correlation Between Apollo Medical and Tenaris SA

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

Diversification Opportunities for Apollo Medical and Tenaris SA

0.79

Correlation Coefficient

Apollo Medical  Tenaris SA

Poor diversification

The 3 months correlation between Apollo and Tenaris is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Medical Holdings and Tenaris SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenaris SA 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 Tenaris SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenaris SA has no effect on the direction of Apollo Medical i.e., Apollo Medical and Tenaris SA go up and down completely randomly.

Pair Corralation between Apollo Medical and Tenaris SA

Assuming the 90 days horizon Apollo Medical is expected to generate 7.73 times less return on investment than Tenaris SA. But when comparing it to its historical volatility, Apollo Medical Holdings is 1.12 times less risky than Tenaris SA. It trades about 0.05 of its potential returns per unit of risk. Tenaris SA is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  2,501  in Tenaris SA on September 13, 2024 and sell it today you would earn a total of  1,179  from holding Tenaris SA or generate 47.14% return on investment over 90 days.

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

Apollo Medical Holdings  vs.  Tenaris SA

Apollo Medical Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Medical Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Apollo Medical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Tenaris SA

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Tenaris SA are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tenaris SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apollo Medical and Tenaris SA

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

The idea behind Apollo Medical Holdings and Tenaris SA 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.