Correlation Between APS Energia and Adiuvo Investment

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

By analyzing existing cross correlation between APS Energia SA and Adiuvo Investment SA, you can compare the effects of market volatilities on APS Energia and Adiuvo Investment 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 APS Energia with a short position of Adiuvo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of APS Energia and Adiuvo Investment.

Diversification Opportunities for APS Energia and Adiuvo Investment

0.38

Correlation Coefficient

APS Energia  Adiuvo Investment

Weak diversification

The 3 months correlation between APS and Adiuvo is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding APS Energia SA and Adiuvo Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adiuvo Investment and APS Energia 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 APS Energia SA are associated (or correlated) with Adiuvo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adiuvo Investment has no effect on the direction of APS Energia i.e., APS Energia and Adiuvo Investment go up and down completely randomly.

Pair Corralation between APS Energia and Adiuvo Investment

Assuming the 90 days trading horizon APS Energia is expected to generate 7.83 times less return on investment than Adiuvo Investment. But when comparing it to its historical volatility, APS Energia SA is 3.27 times less risky than Adiuvo Investment. It trades about 0.1 of its potential returns per unit of risk. Adiuvo Investment SA is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  32.00  in Adiuvo Investment SA on December 29, 2024 and sell it today you would earn a total of  97.00  from holding Adiuvo Investment SA or generate 303.13% return on investment over 90 days.

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

APS Energia SA  vs.  Adiuvo Investment SA

APS Energia SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in APS Energia SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, APS Energia reported solid returns over the last few months and may actually be approaching a breakup point.

Adiuvo Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Adiuvo Investment SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Adiuvo Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APS Energia and Adiuvo Investment

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

The idea behind APS Energia SA and Adiuvo Investment SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.