Correlation Between Apollo Investment and HOYA

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

Diversification Opportunities for Apollo Investment and HOYA

0.32

Correlation Coefficient

Apollo Investment  HOYA

Weak diversification

The 3 months correlation between Apollo and HOYA is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and HOYA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA 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 HOYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA has no effect on the direction of Apollo Investment i.e., Apollo Investment and HOYA go up and down completely randomly.

Pair Corralation between Apollo Investment and HOYA

Assuming the 90 days trading horizon Apollo Investment Corp is expected to generate 0.73 times more return on investment than HOYA. However, Apollo Investment Corp is 1.38 times less risky than HOYA. It trades about -0.07 of its potential returns per unit of risk. HOYA Corporation is currently generating about -0.11 per unit of risk. If you would invest  1,250  in Apollo Investment Corp on December 21, 2024 and sell it today you would lose (74.00) from holding Apollo Investment Corp or give up 5.92% of portfolio value over 90 days.

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

Apollo Investment Corp  vs.  HOYA Corp.

Apollo Investment Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apollo Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

HOYA

Risk-Adjusted Performance

Very Weak

Over the last 90 days HOYA Corporation 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 Investment and HOYA

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

The idea behind Apollo Investment Corp and HOYA Corporation 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.