Correlation Between APA and Jupiter Energy

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

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

Diversification Opportunities for APA and Jupiter Energy

-0.5

Correlation Coefficient

APA  Jupiter Energy

Very good diversification

The 3 months correlation between APA and Jupiter is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding APA Group and Jupiter Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Energy and APA 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 APA Group are associated (or correlated) with Jupiter Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Energy has no effect on the direction of APA i.e., APA and Jupiter Energy go up and down completely randomly.

Pair Corralation between APA and Jupiter Energy

Assuming the 90 days trading horizon APA Group is expected to under-perform the Jupiter Energy. But the stock apears to be less risky and, when comparing its historical volatility, APA Group is 5.83 times less risky than Jupiter Energy. The stock trades about -0.03 of its potential returns per unit of risk. The Jupiter Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1.60  in Jupiter Energy on September 15, 2024 and sell it today you would earn a total of  1.40  from holding Jupiter Energy or generate 87.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

APA Group  vs.  Jupiter Energy

APA Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APA Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, APA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Jupiter Energy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jupiter Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Jupiter Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APA and Jupiter Energy

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

The idea behind APA Group and Jupiter Energy 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.