Correlation Between AAPICO Hitech and Peoples Garment

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

Diversification Opportunities for AAPICO Hitech and Peoples Garment

0.24

Correlation Coefficient

AAPICO Hitech  Peoples Garment

Modest diversification

The 3 months correlation between AAPICO and Peoples is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AAPICO Hitech Public and Peoples Garment Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Garment 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 Peoples Garment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Garment Public has no effect on the direction of AAPICO Hitech i.e., AAPICO Hitech and Peoples Garment go up and down completely randomly.

Pair Corralation between AAPICO Hitech and Peoples Garment

Assuming the 90 days horizon AAPICO Hitech Public is expected to under-perform the Peoples Garment. But the stock apears to be less risky and, when comparing its historical volatility, AAPICO Hitech Public is 19.87 times less risky than Peoples Garment. The stock trades about -0.05 of its potential returns per unit of risk. The Peoples Garment Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  759.00  in Peoples Garment Public on December 4, 2024 and sell it today you would earn a total of  11.00  from holding Peoples Garment Public or generate 1.45% return on investment over 90 days.

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

AAPICO Hitech Public  vs.  Peoples Garment 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.

Peoples Garment Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peoples Garment 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.

Pair Trading with AAPICO Hitech and Peoples Garment

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

The idea behind AAPICO Hitech Public and Peoples Garment 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.