Correlation Between Apollo Investment and PREMIER FOODS

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

Diversification Opportunities for Apollo Investment and PREMIER FOODS

0.11

Correlation Coefficient

Apollo Investment  PREMIER FOODS

Average diversification

The 3 months correlation between Apollo and PREMIER is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS 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 PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of Apollo Investment i.e., Apollo Investment and PREMIER FOODS go up and down completely randomly.

Pair Corralation between Apollo Investment and PREMIER FOODS

Assuming the 90 days trading horizon Apollo Investment is expected to generate 1.91 times less return on investment than PREMIER FOODS. But when comparing it to its historical volatility, Apollo Investment Corp is 1.13 times less risky than PREMIER FOODS. It trades about 0.04 of its potential returns per unit of risk. PREMIER FOODS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  181.00  in PREMIER FOODS on December 2, 2024 and sell it today you would earn a total of  43.00  from holding PREMIER FOODS or generate 23.76% return on investment over 90 days.

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

Apollo Investment Corp  vs.  PREMIER FOODS

Apollo Investment Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Investment Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Apollo Investment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

PREMIER FOODS

Risk-Adjusted Performance

Very Weak

Over the last 90 days PREMIER FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, PREMIER FOODS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Apollo Investment and PREMIER FOODS

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

The idea behind Apollo Investment Corp and PREMIER FOODS 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.