Correlation Between Apogee Enterprises and TMT Acquisition

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

By analyzing existing cross correlation between Apogee Enterprises and TMT Acquisition Corp, you can compare the effects of market volatilities on Apogee Enterprises and TMT Acquisition 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 TMT Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apogee Enterprises and TMT Acquisition.

Diversification Opportunities for Apogee Enterprises and TMT Acquisition

0.0

Correlation Coefficient

Apogee Enterprises  TMT Acquisition

Pay attention - limited upside

The 3 months correlation between Apogee and TMT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and TMT Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Acquisition Corp 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 TMT Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Acquisition Corp has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and TMT Acquisition go up and down completely randomly.

Pair Corralation between Apogee Enterprises and TMT Acquisition

Given the investment horizon of 90 days Apogee Enterprises is expected to generate 14.1 times less return on investment than TMT Acquisition. But when comparing it to its historical volatility, Apogee Enterprises is 5.74 times less risky than TMT Acquisition. It trades about 0.03 of its potential returns per unit of risk. TMT Acquisition Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  22.00  in TMT Acquisition Corp on October 21, 2024 and sell it today you would earn a total of  16.00  from holding TMT Acquisition Corp or generate 72.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	42.94%
Values	Daily Returns

Apogee Enterprises  vs.  TMT Acquisition Corp

Apogee Enterprises

Risk-Adjusted Performance

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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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

TMT Acquisition Corp

Risk-Adjusted Performance

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Very Weak

Over the last 90 days TMT Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, TMT Acquisition 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 Apogee Enterprises and TMT Acquisition

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

The idea behind Apogee Enterprises and TMT Acquisition Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.