Correlation Between Apollo Global and Patria Investments

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

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

Diversification Opportunities for Apollo Global and Patria Investments

0.77

Correlation Coefficient

Apollo Global  Patria Investments

Poor diversification

The 3 months correlation between Apollo and Patria is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Global Management and Patria Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments and Apollo Global 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 Global Management are associated (or correlated) with Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Apollo Global i.e., Apollo Global and Patria Investments go up and down completely randomly.

Pair Corralation between Apollo Global and Patria Investments

Considering the 90-day investment horizon Apollo Global Management is expected to generate 0.84 times more return on investment than Patria Investments. However, Apollo Global Management is 1.19 times less risky than Patria Investments. It trades about -0.19 of its potential returns per unit of risk. Patria Investments is currently generating about -0.19 per unit of risk. If you would invest  17,471  in Apollo Global Management on October 11, 2024 and sell it today you would lose (1,273) from holding Apollo Global Management or give up 7.29% of portfolio value over 90 days.

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

Apollo Global Management  vs.  Patria Investments

Apollo Global Management

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Global Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Apollo Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Patria Investments

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Patria Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Apollo Global and Patria Investments

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

The idea behind Apollo Global Management and Patria Investments 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.