Correlation Between Apogee Enterprises and Perma Pipe

Can any of the company-specific risk be diversified away by investing in both Apogee Enterprises and Perma Pipe 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 Apogee Enterprises and Perma Pipe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apogee Enterprises and Perma Pipe International Holdings, you can compare the effects of market volatilities on Apogee Enterprises and Perma Pipe 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 Apogee Enterprises with a short position of Perma Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apogee Enterprises and Perma Pipe.

Diversification Opportunities for Apogee Enterprises and Perma Pipe

0.56

Correlation Coefficient

Apogee Enterprises  Perma Pipe

Very weak diversification

The 3 months correlation between Apogee and Perma is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and Perma Pipe International Holdi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Pipe Internati and Apogee Enterprises 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 Apogee Enterprises are associated (or correlated) with Perma Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Pipe Internati has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and Perma Pipe go up and down completely randomly.

Pair Corralation between Apogee Enterprises and Perma Pipe

Given the investment horizon of 90 days Apogee Enterprises is expected to under-perform the Perma Pipe. But the stock apears to be less risky and, when comparing its historical volatility, Apogee Enterprises is 1.27 times less risky than Perma Pipe. The stock trades about -0.28 of its potential returns per unit of risk. The Perma Pipe International Holdings is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,579  in Perma Pipe International Holdings on December 1, 2024 and sell it today you would lose (238.00) from holding Perma Pipe International Holdings or give up 15.07% of portfolio value over 90 days.

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

Apogee Enterprises  vs.  Perma Pipe International Holdi

Apogee Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apogee Enterprises 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 nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Perma Pipe Internati

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perma Pipe International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Apogee Enterprises and Perma Pipe

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

The idea behind Apogee Enterprises and Perma Pipe International Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.