Correlation Between APT Medical and Allied Machinery

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

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

Diversification Opportunities for APT Medical and Allied Machinery

-0.08

Correlation Coefficient

APT Medical  Allied Machinery

Good diversification

The 3 months correlation between APT and Allied is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding APT Medical and Allied Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Machinery 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 Allied Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Machinery has no effect on the direction of APT Medical i.e., APT Medical and Allied Machinery go up and down completely randomly.

Pair Corralation between APT Medical and Allied Machinery

Assuming the 90 days trading horizon APT Medical is expected to under-perform the Allied Machinery. But the stock apears to be less risky and, when comparing its historical volatility, APT Medical is 2.14 times less risky than Allied Machinery. The stock trades about -0.09 of its potential returns per unit of risk. The Allied Machinery Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,628  in Allied Machinery Co on October 6, 2024 and sell it today you would earn a total of  91.00  from holding Allied Machinery Co or generate 5.59% 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.  Allied Machinery 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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Allied Machinery

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Allied Machinery Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Allied Machinery sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APT Medical and Allied Machinery

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

The idea behind APT Medical and Allied Machinery 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.