Correlation Between AAPICO Hitech and Indorama Ventures

Can any of the company-specific risk be diversified away by investing in both AAPICO Hitech and Indorama Ventures 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 Indorama Ventures 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 Indorama Ventures PCL, you can compare the effects of market volatilities on AAPICO Hitech and Indorama Ventures 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 Indorama Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAPICO Hitech and Indorama Ventures.

Diversification Opportunities for AAPICO Hitech and Indorama Ventures

-0.01

Correlation Coefficient

AAPICO Hitech  Indorama Ventures

Good diversification

The 3 months correlation between AAPICO and Indorama is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding AAPICO Hitech Public and Indorama Ventures PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indorama Ventures PCL 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 Indorama Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indorama Ventures PCL has no effect on the direction of AAPICO Hitech i.e., AAPICO Hitech and Indorama Ventures go up and down completely randomly.

Pair Corralation between AAPICO Hitech and Indorama Ventures

Assuming the 90 days horizon AAPICO Hitech Public is expected to under-perform the Indorama Ventures. But the stock apears to be less risky and, when comparing its historical volatility, AAPICO Hitech Public is 1.01 times less risky than Indorama Ventures. The stock trades about -0.03 of its potential returns per unit of risk. The Indorama Ventures PCL is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,827  in Indorama Ventures PCL on September 1, 2024 and sell it today you would earn a total of  673.00  from holding Indorama Ventures PCL or generate 36.84% return on investment over 90 days.

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

AAPICO Hitech Public  vs.  Indorama Ventures PCL

AAPICO Hitech Public

Risk-Adjusted Performance

0 of 100

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 quite persistent fundamental drivers, AAPICO Hitech is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Indorama Ventures PCL

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Indorama Ventures PCL are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Indorama Ventures disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AAPICO Hitech and Indorama Ventures

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

The idea behind AAPICO Hitech Public and Indorama Ventures PCL 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.