Correlation Between Apollo Investment and ESSILORLUXOTTICA

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Can any of the company-specific risk be diversified away by investing in both Apollo Investment and ESSILORLUXOTTICA 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 Investment and ESSILORLUXOTTICA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Investment Corp and ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on Apollo Investment and ESSILORLUXOTTICA 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 Investment with a short position of ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Investment and ESSILORLUXOTTICA.

Diversification Opportunities for Apollo Investment and ESSILORLUXOTTICA

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Apollo and ESSILORLUXOTTICA is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON and Apollo Investment 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 Investment Corp are associated (or correlated) with ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of Apollo Investment i.e., Apollo Investment and ESSILORLUXOTTICA go up and down completely randomly.

Pair Corralation between Apollo Investment and ESSILORLUXOTTICA

Assuming the 90 days trading horizon Apollo Investment is expected to generate 9.12 times less return on investment than ESSILORLUXOTTICA. In addition to that, Apollo Investment is 1.29 times more volatile than ESSILORLUXOTTICA 12ON. It trades about 0.01 of its total potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.15 per unit of volatility. If you would invest  11,300  in ESSILORLUXOTTICA 12ON on October 11, 2024 and sell it today you would earn a total of  300.00  from holding ESSILORLUXOTTICA 12ON or generate 2.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Apollo Investment Corp  vs.  ESSILORLUXOTTICA 12ON

 Performance 
       Timeline  
Apollo Investment Corp 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Investment Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Apollo Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.
ESSILORLUXOTTICA 12ON 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in ESSILORLUXOTTICA 12ON are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, ESSILORLUXOTTICA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Apollo Investment and ESSILORLUXOTTICA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apollo Investment and ESSILORLUXOTTICA

The main advantage of trading using opposite Apollo Investment and ESSILORLUXOTTICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Investment position performs unexpectedly, ESSILORLUXOTTICA 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 ESSILORLUXOTTICA will offset losses from the drop in ESSILORLUXOTTICA's long position.
The idea behind Apollo Investment Corp and ESSILORLUXOTTICA 12ON 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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