Correlation Between APT Medical and Xiamen ITG

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

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

Diversification Opportunities for APT Medical and Xiamen ITG

0.62

Correlation Coefficient

APT Medical  Xiamen ITG

Poor diversification

The 3 months correlation between APT and Xiamen is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding APT Medical and Xiamen ITG Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen ITG Group 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 Xiamen ITG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen ITG Group has no effect on the direction of APT Medical i.e., APT Medical and Xiamen ITG go up and down completely randomly.

Pair Corralation between APT Medical and Xiamen ITG

Assuming the 90 days trading horizon APT Medical is expected to generate 1.53 times more return on investment than Xiamen ITG. However, APT Medical is 1.53 times more volatile than Xiamen ITG Group. It trades about 0.07 of its potential returns per unit of risk. Xiamen ITG Group is currently generating about 0.0 per unit of risk. If you would invest  24,058  in APT Medical on September 22, 2024 and sell it today you would earn a total of  10,565  from holding APT Medical or generate 43.91% return on investment over 90 days.

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

APT Medical  vs.  Xiamen ITG Group

APT Medical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in APT Medical are ranked lower than 3 (%) 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 January 2025.

Xiamen ITG Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xiamen ITG Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xiamen ITG sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APT Medical and Xiamen ITG

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

The idea behind APT Medical and Xiamen ITG Group 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 Anywhere module to track or share privately all of your investments from the convenience of any device.