Correlation Between Apollo Power and Reit 1

Can any of the company-specific risk be diversified away by investing in both Apollo Power and Reit 1 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 Apollo Power and Reit 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apollo Power and Reit 1, you can compare the effects of market volatilities on Apollo Power and Reit 1 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 Apollo Power with a short position of Reit 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Power and Reit 1.

Diversification Opportunities for Apollo Power and Reit 1

0.37

Correlation Coefficient

Apollo Power  Reit 1

Weak diversification

The 3 months correlation between Apollo and Reit is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Power and Reit 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reit 1 and Apollo Power 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 Apollo Power are associated (or correlated) with Reit 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reit 1 has no effect on the direction of Apollo Power i.e., Apollo Power and Reit 1 go up and down completely randomly.

Pair Corralation between Apollo Power and Reit 1

Assuming the 90 days trading horizon Apollo Power is expected to under-perform the Reit 1. In addition to that, Apollo Power is 2.43 times more volatile than Reit 1. It trades about -0.1 of its total potential returns per unit of risk. Reit 1 is currently generating about -0.06 per unit of volatility. If you would invest  188,600  in Reit 1 on December 30, 2024 and sell it today you would lose (11,100) from holding Reit 1 or give up 5.89% of portfolio value over 90 days.

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

Apollo Power  vs.  Reit 1

Apollo Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apollo Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Reit 1

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reit 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Apollo Power and Reit 1

The main advantage of trading using opposite Apollo Power and Reit 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Power position performs unexpectedly, Reit 1 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 Reit 1 will offset losses from the drop in Reit 1's long position.

The idea behind Apollo Power and Reit 1 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..