Correlation Between AgJunction and Apollo Commercial

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

By analyzing existing cross correlation between AgJunction and Apollo Commercial Real, you can compare the effects of market volatilities on AgJunction and Apollo Commercial 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 AgJunction with a short position of Apollo Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AgJunction and Apollo Commercial.

Diversification Opportunities for AgJunction and Apollo Commercial

0.03

Correlation Coefficient

AgJunction  Apollo Commercial

Significant diversification

The 3 months correlation between AgJunction and Apollo is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding AgJunction and Apollo Commercial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Commercial Real and AgJunction 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 AgJunction are associated (or correlated) with Apollo Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Commercial Real has no effect on the direction of AgJunction i.e., AgJunction and Apollo Commercial go up and down completely randomly.

Pair Corralation between AgJunction and Apollo Commercial

Considering the 90-day investment horizon AgJunction is expected to generate 118.08 times more return on investment than Apollo Commercial. However, AgJunction is 118.08 times more volatile than Apollo Commercial Real. It trades about 0.12 of its potential returns per unit of risk. Apollo Commercial Real is currently generating about -0.02 per unit of risk. If you would invest  357.00  in AgJunction on September 14, 2024 and sell it today you would lose (57.00) from holding AgJunction or give up 15.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

AgJunction  vs.  Apollo Commercial Real

AgJunction

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days AgJunction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unsteady forward-looking indicators, AgJunction showed solid returns over the last few months and may actually be approaching a breakup point.

Apollo Commercial Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Commercial Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Apollo Commercial is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with AgJunction and Apollo Commercial

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

The idea behind AgJunction and Apollo Commercial Real 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.