Correlation Between AAPICO Hitech and Dynasty Ceramic

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

By analyzing existing cross correlation between AAPICO Hitech Public and Dynasty Ceramic Public, you can compare the effects of market volatilities on AAPICO Hitech and Dynasty Ceramic 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 AAPICO Hitech with a short position of Dynasty Ceramic. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAPICO Hitech and Dynasty Ceramic.

Diversification Opportunities for AAPICO Hitech and Dynasty Ceramic

0.92

Correlation Coefficient

AAPICO Hitech  Dynasty Ceramic

Almost no diversification

The 3 months correlation between AAPICO and Dynasty is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding AAPICO Hitech Public and Dynasty Ceramic Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynasty Ceramic Public and AAPICO Hitech 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 AAPICO Hitech Public are associated (or correlated) with Dynasty Ceramic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynasty Ceramic Public has no effect on the direction of AAPICO Hitech i.e., AAPICO Hitech and Dynasty Ceramic go up and down completely randomly.

Pair Corralation between AAPICO Hitech and Dynasty Ceramic

Assuming the 90 days horizon AAPICO Hitech Public is expected to under-perform the Dynasty Ceramic. But the stock apears to be less risky and, when comparing its historical volatility, AAPICO Hitech Public is 1.51 times less risky than Dynasty Ceramic. The stock trades about -0.17 of its potential returns per unit of risk. The Dynasty Ceramic Public is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  176.00  in Dynasty Ceramic Public on December 29, 2024 and sell it today you would lose (32.00) from holding Dynasty Ceramic Public or give up 18.18% of portfolio value over 90 days.

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

AAPICO Hitech Public  vs.  Dynasty Ceramic Public

AAPICO Hitech Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days AAPICO Hitech Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Dynasty Ceramic Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynasty Ceramic Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with AAPICO Hitech and Dynasty Ceramic

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

The idea behind AAPICO Hitech Public and Dynasty Ceramic Public 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.