Correlation Between APEX International and K Way

Can any of the company-specific risk be diversified away by investing in both APEX International and K Way 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 APEX International and K Way into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between APEX International Financial and K Way Information, you can compare the effects of market volatilities on APEX International and K Way 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 APEX International with a short position of K Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of APEX International and K Way.

Diversification Opportunities for APEX International and K Way

-0.17

Correlation Coefficient

APEX International  K Way

Good diversification

The 3 months correlation between APEX and 5201 is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding APEX International Financial and K Way Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Way Information and APEX International 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 APEX International Financial are associated (or correlated) with K Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Way Information has no effect on the direction of APEX International i.e., APEX International and K Way go up and down completely randomly.

Pair Corralation between APEX International and K Way

Assuming the 90 days trading horizon APEX International Financial is expected to generate 2.34 times more return on investment than K Way. However, APEX International is 2.34 times more volatile than K Way Information. It trades about 0.09 of its potential returns per unit of risk. K Way Information is currently generating about 0.02 per unit of risk. If you would invest  2,530  in APEX International Financial on September 14, 2024 and sell it today you would earn a total of  435.00  from holding APEX International Financial or generate 17.19% return on investment over 90 days.

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

APEX International Financial  vs.  K Way Information

APEX International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in APEX International Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, APEX International showed solid returns over the last few months and may actually be approaching a breakup point.

K Way Information

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in K Way Information are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, K Way is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with APEX International and K Way

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

The idea behind APEX International Financial and K Way Information 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.