Correlation Between AP Public and Noble Development

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

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

Diversification Opportunities for AP Public and Noble Development

0.56

Correlation Coefficient

AP Public  Noble Development

Very weak diversification

The 3 months correlation between AP Public and Noble is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding AP Public and Noble Development Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble Development Public and AP Public 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 AP Public are associated (or correlated) with Noble Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble Development Public has no effect on the direction of AP Public i.e., AP Public and Noble Development go up and down completely randomly.

Pair Corralation between AP Public and Noble Development

Assuming the 90 days horizon AP Public is expected to generate 1.35 times more return on investment than Noble Development. However, AP Public is 1.35 times more volatile than Noble Development Public. It trades about 0.0 of its potential returns per unit of risk. Noble Development Public is currently generating about -0.12 per unit of risk. If you would invest  885.00  in AP Public on September 5, 2024 and sell it today you would lose (10.00) from holding AP Public or give up 1.13% of portfolio value over 90 days.

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

AP Public  vs.  Noble Development Public

AP Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AP Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, AP Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Noble Development Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noble Development Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with AP Public and Noble Development

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

The idea behind AP Public and Noble Development 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.