Correlation Between APT Medical and Sany Heavy

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

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

Diversification Opportunities for APT Medical and Sany Heavy

0.36

Correlation Coefficient

APT Medical  Sany Heavy

Weak diversification

The 3 months correlation between APT and Sany is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding APT Medical and Sany Heavy Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sany Heavy Energy 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 Sany Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sany Heavy Energy has no effect on the direction of APT Medical i.e., APT Medical and Sany Heavy go up and down completely randomly.

Pair Corralation between APT Medical and Sany Heavy

Assuming the 90 days trading horizon APT Medical is expected to generate 1.17 times more return on investment than Sany Heavy. However, APT Medical is 1.17 times more volatile than Sany Heavy Energy. It trades about 0.05 of its potential returns per unit of risk. Sany Heavy Energy is currently generating about -0.01 per unit of risk. If you would invest  23,653  in APT Medical on October 21, 2024 and sell it today you would earn a total of  12,349  from holding APT Medical or generate 52.21% return on investment over 90 days.

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

APT Medical  vs.  Sany Heavy Energy

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.

Sany Heavy Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sany Heavy Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sany Heavy 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 Sany Heavy

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

The idea behind APT Medical and Sany Heavy Energy 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.