Correlation Between APA and Triunfo Participaes

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

By analyzing existing cross correlation between APA Corporation and Triunfo Participaes e, you can compare the effects of market volatilities on APA and Triunfo Participaes 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 Triunfo Participaes. Check out your portfolio center. Please also check ongoing floating volatility patterns of APA and Triunfo Participaes.

Diversification Opportunities for APA and Triunfo Participaes

-0.04

Correlation Coefficient

APA  Triunfo Participaes

Good diversification

The 3 months correlation between APA and Triunfo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding APA Corp. and Triunfo Participaes e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triunfo Participaes 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 Triunfo Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triunfo Participaes has no effect on the direction of APA i.e., APA and Triunfo Participaes go up and down completely randomly.

Pair Corralation between APA and Triunfo Participaes

Assuming the 90 days trading horizon APA Corporation is expected to under-perform the Triunfo Participaes. But the stock apears to be less risky and, when comparing its historical volatility, APA Corporation is 1.54 times less risky than Triunfo Participaes. The stock trades about -0.02 of its potential returns per unit of risk. The Triunfo Participaes e is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  500.00  in Triunfo Participaes e on September 27, 2024 and sell it today you would earn a total of  44.00  from holding Triunfo Participaes e or generate 8.8% return on investment over 90 days.

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

APA Corp.  vs.  Triunfo Participaes e

APA Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APA Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Triunfo Participaes

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Triunfo Participaes e are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Triunfo Participaes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APA and Triunfo Participaes

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

The idea behind APA Corporation and Triunfo Participaes e 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.