Correlation Between Coloray International and APS Holdings

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

By analyzing existing cross correlation between Coloray International Investment and APS Holdings, you can compare the effects of market volatilities on Coloray International and APS Holdings 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 Coloray International with a short position of APS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloray International and APS Holdings.

Diversification Opportunities for Coloray International and APS Holdings

0.46

Correlation Coefficient

Coloray International  APS Holdings

Very weak diversification

The 3 months correlation between Coloray and APS is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and APS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Holdings and Coloray International 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 Coloray International Investment are associated (or correlated) with APS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Holdings has no effect on the direction of Coloray International i.e., Coloray International and APS Holdings go up and down completely randomly.

Pair Corralation between Coloray International and APS Holdings

Assuming the 90 days trading horizon Coloray International Investment is expected to generate 1.05 times more return on investment than APS Holdings. However, Coloray International is 1.05 times more volatile than APS Holdings. It trades about 0.23 of its potential returns per unit of risk. APS Holdings is currently generating about 0.09 per unit of risk. If you would invest  55,600  in Coloray International Investment on December 29, 2024 and sell it today you would earn a total of  25,500  from holding Coloray International Investment or generate 45.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Coloray International Investme  vs.  APS Holdings

Coloray International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coloray International Investment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Coloray International sustained solid returns over the last few months and may actually be approaching a breakup point.

APS Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in APS Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, APS Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coloray International and APS Holdings

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

The idea behind Coloray International Investment and APS Holdings 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 Commodity Directory module to find actively traded commodities issued by global exchanges.