Correlation Between APT Medical and Changchun

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

By analyzing existing cross correlation between APT Medical and Changchun UP Optotech, you can compare the effects of market volatilities on APT Medical and Changchun 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 APT Medical with a short position of Changchun. Check out your portfolio center. Please also check ongoing floating volatility patterns of APT Medical and Changchun.

Diversification Opportunities for APT Medical and Changchun

0.38

Correlation Coefficient

APT Medical  Changchun

Weak diversification

The 3 months correlation between APT and Changchun is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding APT Medical and Changchun UP Optotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun UP Optotech and APT 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 APT Medical are associated (or correlated) with Changchun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun UP Optotech has no effect on the direction of APT Medical i.e., APT Medical and Changchun go up and down completely randomly.

Pair Corralation between APT Medical and Changchun

Assuming the 90 days trading horizon APT Medical is expected to generate 0.83 times more return on investment than Changchun. However, APT Medical is 1.2 times less risky than Changchun. It trades about -0.01 of its potential returns per unit of risk. Changchun UP Optotech is currently generating about -0.06 per unit of risk. If you would invest  36,300  in APT Medical on December 2, 2024 and sell it today you would lose (697.00) from holding APT Medical or give up 1.92% of portfolio value over 90 days.

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

APT Medical  vs.  Changchun UP Optotech

APT Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days APT Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APT Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Changchun UP Optotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Changchun UP Optotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with APT Medical and Changchun

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

The idea behind APT Medical and Changchun UP Optotech 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.