Correlation Between APT Medical and Tongding Interconnection

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

By analyzing existing cross correlation between APT Medical and Tongding Interconnection Information, you can compare the effects of market volatilities on APT Medical and Tongding Interconnection 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 Tongding Interconnection. Check out your portfolio center. Please also check ongoing floating volatility patterns of APT Medical and Tongding Interconnection.

Diversification Opportunities for APT Medical and Tongding Interconnection

0.37

Correlation Coefficient

APT Medical  Tongding Interconnection

Weak diversification

The 3 months correlation between APT and Tongding is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding APT Medical and Tongding Interconnection Infor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongding Interconnection 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 Tongding Interconnection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongding Interconnection has no effect on the direction of APT Medical i.e., APT Medical and Tongding Interconnection go up and down completely randomly.

Pair Corralation between APT Medical and Tongding Interconnection

Assuming the 90 days trading horizon APT Medical is expected to generate 0.52 times more return on investment than Tongding Interconnection. However, APT Medical is 1.91 times less risky than Tongding Interconnection. It trades about 0.06 of its potential returns per unit of risk. Tongding Interconnection Information is currently generating about 0.01 per unit of risk. If you would invest  35,594  in APT Medical on December 25, 2024 and sell it today you would earn a total of  2,116  from holding APT Medical or generate 5.94% return on investment over 90 days.

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

APT Medical  vs.  Tongding Interconnection Infor

APT Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in APT Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, APT Medical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tongding Interconnection

Risk-Adjusted Performance

Very Weak

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

Pair Trading with APT Medical and Tongding Interconnection

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

The idea behind APT Medical and Tongding Interconnection 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.