Correlation Between APS Energia and T Bull

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

Diversification Opportunities for APS Energia and T Bull

0.49

Correlation Coefficient

APS Energia  T Bull

Very weak diversification

The 3 months correlation between APS and TBL is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding APS Energia SA and T Bull SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Bull SA 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 T Bull. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Bull SA has no effect on the direction of APS Energia i.e., APS Energia and T Bull go up and down completely randomly.

Pair Corralation between APS Energia and T Bull

Assuming the 90 days trading horizon APS Energia SA is expected to under-perform the T Bull. But the stock apears to be less risky and, when comparing its historical volatility, APS Energia SA is 1.42 times less risky than T Bull. The stock trades about -0.03 of its potential returns per unit of risk. The T Bull SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  378.00  in T Bull SA on September 3, 2024 and sell it today you would earn a total of  12.00  from holding T Bull SA or generate 3.17% return on investment over 90 days.

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

APS Energia SA  vs.  T Bull SA

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.

T Bull SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in T Bull SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, T Bull may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with APS Energia and T Bull

The main advantage of trading using opposite APS Energia and T Bull positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APS Energia position performs unexpectedly, T Bull 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 T Bull will offset losses from the drop in T Bull's long position.

The idea behind APS Energia SA and T Bull 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.

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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.