Correlation Between Apex Frozen and Consolidated Construction

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

By analyzing existing cross correlation between Apex Frozen Foods and Consolidated Construction Consortium, you can compare the effects of market volatilities on Apex Frozen and Consolidated Construction 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 Apex Frozen with a short position of Consolidated Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apex Frozen and Consolidated Construction.

Diversification Opportunities for Apex Frozen and Consolidated Construction

0.02

Correlation Coefficient

Apex Frozen  Consolidated Construction

Significant diversification

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

Pair Corralation between Apex Frozen and Consolidated Construction

Assuming the 90 days trading horizon Apex Frozen Foods is expected to generate 1.1 times more return on investment than Consolidated Construction. However, Apex Frozen is 1.1 times more volatile than Consolidated Construction Consortium. It trades about 0.25 of its potential returns per unit of risk. Consolidated Construction Consortium is currently generating about 0.26 per unit of risk. If you would invest  23,140  in Apex Frozen Foods on September 19, 2024 and sell it today you would earn a total of  3,651  from holding Apex Frozen Foods or generate 15.78% return on investment over 90 days.

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

Apex Frozen Foods  vs.  Consolidated Construction Cons

Apex Frozen Foods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apex Frozen Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Apex Frozen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Consolidated Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consolidated Construction Consortium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Apex Frozen and Consolidated Construction

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

The idea behind Apex Frozen Foods and Consolidated Construction Consortium 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.