Correlation Between APS Energia and GreenX Metals

Can any of the company-specific risk be diversified away by investing in both APS Energia and GreenX Metals 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 GreenX Metals 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 GreenX Metals, you can compare the effects of market volatilities on APS Energia and GreenX Metals 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 GreenX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of APS Energia and GreenX Metals.

Diversification Opportunities for APS Energia and GreenX Metals

-0.72

Correlation Coefficient

APS Energia  GreenX Metals

Pay attention - limited upside

The 3 months correlation between APS and GreenX is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding APS Energia SA and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals 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 GreenX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenX Metals has no effect on the direction of APS Energia i.e., APS Energia and GreenX Metals go up and down completely randomly.

Pair Corralation between APS Energia and GreenX Metals

Assuming the 90 days trading horizon APS Energia SA is expected to generate 1.94 times more return on investment than GreenX Metals. However, APS Energia is 1.94 times more volatile than GreenX Metals. It trades about 0.18 of its potential returns per unit of risk. GreenX Metals is currently generating about -0.2 per unit of risk. If you would invest  229.00  in APS Energia SA on September 13, 2024 and sell it today you would earn a total of  40.00  from holding APS Energia SA or generate 17.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

APS Energia SA  vs.  GreenX Metals

APS Energia SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APS Energia SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, APS Energia is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

GreenX Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GreenX Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, GreenX Metals is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with APS Energia and GreenX Metals

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

The idea behind APS Energia SA and GreenX Metals 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.