Correlation Between APT Medical and Healthcare

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

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

Diversification Opportunities for APT Medical and Healthcare

-0.15

Correlation Coefficient

APT Medical  Healthcare

Good diversification

The 3 months correlation between APT and Healthcare is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding APT Medical and Healthcare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare 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 Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare has no effect on the direction of APT Medical i.e., APT Medical and Healthcare go up and down completely randomly.

Pair Corralation between APT Medical and Healthcare

Assuming the 90 days trading horizon APT Medical is expected to generate 1.07 times more return on investment than Healthcare. However, APT Medical is 1.07 times more volatile than Healthcare Co. It trades about 0.05 of its potential returns per unit of risk. Healthcare Co is currently generating about -0.09 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  1,923  from holding APT Medical or generate 5.4% return on investment over 90 days.

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

APT Medical  vs.  Healthcare Co

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.

Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Healthcare Co 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 Healthcare

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

The idea behind APT Medical and Healthcare Co 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.