Correlation Between AppTech Payments and Barloworld

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

By analyzing existing cross correlation between AppTech Payments Corp and Barloworld Ltd ADR, you can compare the effects of market volatilities on AppTech Payments and Barloworld 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 AppTech Payments with a short position of Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of AppTech Payments and Barloworld.

Diversification Opportunities for AppTech Payments and Barloworld

0.02

Correlation Coefficient

AppTech Payments  Barloworld

Significant diversification

The 3 months correlation between AppTech and Barloworld is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding AppTech Payments Corp and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR and AppTech Payments 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 AppTech Payments Corp are associated (or correlated) with Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of AppTech Payments i.e., AppTech Payments and Barloworld go up and down completely randomly.

Pair Corralation between AppTech Payments and Barloworld

Assuming the 90 days horizon AppTech Payments Corp is expected to generate 19.25 times more return on investment than Barloworld. However, AppTech Payments is 19.25 times more volatile than Barloworld Ltd ADR. It trades about 0.1 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about 0.08 per unit of risk. If you would invest  25.00  in AppTech Payments Corp on September 13, 2024 and sell it today you would lose (8.00) from holding AppTech Payments Corp or give up 32.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.31%
Values	Daily Returns

AppTech Payments Corp  vs.  Barloworld Ltd ADR

AppTech Payments Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AppTech Payments Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AppTech Payments showed solid returns over the last few months and may actually be approaching a breakup point.

Barloworld ADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barloworld Ltd ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Barloworld showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AppTech Payments and Barloworld

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

The idea behind AppTech Payments Corp and Barloworld Ltd ADR 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.