Correlation Between APT Medical and A-Zenith Home

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

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

Diversification Opportunities for APT Medical and A-Zenith Home

-0.29

Correlation Coefficient

APT Medical  A-Zenith Home

Very good diversification

The 3 months correlation between APT and A-Zenith is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding APT Medical and A Zenith Home Furnishings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Zenith Home 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 A-Zenith Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Zenith Home has no effect on the direction of APT Medical i.e., APT Medical and A-Zenith Home go up and down completely randomly.

Pair Corralation between APT Medical and A-Zenith Home

Assuming the 90 days trading horizon APT Medical is expected to generate 0.59 times more return on investment than A-Zenith Home. However, APT Medical is 1.71 times less risky than A-Zenith Home. It trades about 0.03 of its potential returns per unit of risk. A Zenith Home Furnishings is currently generating about -0.09 per unit of risk. If you would invest  35,762  in APT Medical on December 24, 2024 and sell it today you would earn a total of  710.00  from holding APT Medical or generate 1.99% 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.  A Zenith Home Furnishings

APT Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in APT Medical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

A Zenith Home

Risk-Adjusted Performance

Very Weak

Over the last 90 days A Zenith Home Furnishings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with APT Medical and A-Zenith Home

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

The idea behind APT Medical and A Zenith Home Furnishings 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.