Correlation Between Apex Frozen and Indo Borax

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

Diversification Opportunities for Apex Frozen and Indo Borax

0.5

Correlation Coefficient

Apex Frozen  Indo Borax

Very weak diversification

The 3 months correlation between Apex and Indo is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Apex Frozen Foods and Indo Borax Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Borax Chemicals 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 Indo Borax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Borax Chemicals has no effect on the direction of Apex Frozen i.e., Apex Frozen and Indo Borax go up and down completely randomly.

Pair Corralation between Apex Frozen and Indo Borax

Assuming the 90 days trading horizon Apex Frozen is expected to generate 2.12 times less return on investment than Indo Borax. But when comparing it to its historical volatility, Apex Frozen Foods is 1.13 times less risky than Indo Borax. It trades about 0.03 of its potential returns per unit of risk. Indo Borax Chemicals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  12,399  in Indo Borax Chemicals on September 12, 2024 and sell it today you would earn a total of  7,922  from holding Indo Borax Chemicals or generate 63.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.42%
Values	Daily Returns

Apex Frozen Foods  vs.  Indo Borax Chemicals

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 weak basic indicators, Apex Frozen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Indo Borax Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Apex Frozen and Indo Borax

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

The idea behind Apex Frozen Foods and Indo Borax Chemicals 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.