Correlation Between APT Medical and UE Furniture

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

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

Diversification Opportunities for APT Medical and UE Furniture

0.17

Correlation Coefficient

APT Medical  UE Furniture

Average diversification

The 3 months correlation between APT and 603600 is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding APT Medical and UE Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UE Furniture 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 UE Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UE Furniture has no effect on the direction of APT Medical i.e., APT Medical and UE Furniture go up and down completely randomly.

Pair Corralation between APT Medical and UE Furniture

Assuming the 90 days trading horizon APT Medical is expected to under-perform the UE Furniture. But the stock apears to be less risky and, when comparing its historical volatility, APT Medical is 1.2 times less risky than UE Furniture. The stock trades about -0.15 of its potential returns per unit of risk. The UE Furniture Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,200  in UE Furniture Co on October 12, 2024 and sell it today you would lose (15.00) from holding UE Furniture Co or give up 1.25% of portfolio value over 90 days.

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

APT Medical  vs.  UE Furniture Co

APT Medical

Risk-Adjusted Performance

0 of 100

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.

UE Furniture

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days UE Furniture Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UE Furniture 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 UE Furniture

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

The idea behind APT Medical and UE Furniture 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.