Correlation Between Apogee Enterprises and Zapata Computing

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

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

Diversification Opportunities for Apogee Enterprises and Zapata Computing

0.65

Correlation Coefficient

Apogee Enterprises  Zapata Computing

Poor diversification

The 3 months correlation between Apogee and Zapata is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and Zapata Computing Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zapata Computing Holdings 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 Zapata Computing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zapata Computing Holdings has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and Zapata Computing go up and down completely randomly.

Pair Corralation between Apogee Enterprises and Zapata Computing

Given the investment horizon of 90 days Apogee Enterprises is expected to under-perform the Zapata Computing. But the stock apears to be less risky and, when comparing its historical volatility, Apogee Enterprises is 54.33 times less risky than Zapata Computing. The stock trades about -0.15 of its potential returns per unit of risk. The Zapata Computing Holdings is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  0.34  in Zapata Computing Holdings on October 20, 2024 and sell it today you would earn a total of  0.22  from holding Zapata Computing Holdings or generate 64.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	17.74%
Values	Daily Returns

Apogee Enterprises  vs.  Zapata Computing Holdings

Apogee Enterprises

Risk-Adjusted Performance

0 of 100

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.

Zapata Computing Holdings

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Zapata Computing Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly uncertain basic indicators, Zapata Computing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apogee Enterprises and Zapata Computing

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

The idea behind Apogee Enterprises and Zapata Computing 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.