Correlation Between APA and Metalfrio Solutions

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

By analyzing existing cross correlation between APA Corporation and Metalfrio Solutions SA, you can compare the effects of market volatilities on APA and Metalfrio Solutions 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 APA with a short position of Metalfrio Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of APA and Metalfrio Solutions.

Diversification Opportunities for APA and Metalfrio Solutions

0.37

Correlation Coefficient

APA  Metalfrio Solutions

Weak diversification

The 3 months correlation between APA and Metalfrio is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding APA Corp. and Metalfrio Solutions SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalfrio Solutions and APA 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 APA Corporation are associated (or correlated) with Metalfrio Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalfrio Solutions has no effect on the direction of APA i.e., APA and Metalfrio Solutions go up and down completely randomly.

Pair Corralation between APA and Metalfrio Solutions

Assuming the 90 days trading horizon APA Corporation is expected to under-perform the Metalfrio Solutions. But the stock apears to be less risky and, when comparing its historical volatility, APA Corporation is 1.28 times less risky than Metalfrio Solutions. The stock trades about -0.11 of its potential returns per unit of risk. The Metalfrio Solutions SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  33,000  in Metalfrio Solutions SA on December 29, 2024 and sell it today you would lose (3,001) from holding Metalfrio Solutions SA or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.44%
Values	Daily Returns

APA Corp.  vs.  Metalfrio Solutions SA

APA Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days APA Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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.

Metalfrio Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metalfrio Solutions SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Metalfrio Solutions is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with APA and Metalfrio Solutions

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

The idea behind APA Corporation and Metalfrio Solutions SA 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.