Correlation Between APAC Resources and Galaxy Digital

Can any of the company-specific risk be diversified away by investing in both APAC Resources and Galaxy Digital 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 APAC Resources and Galaxy Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between APAC Resources Limited and Galaxy Digital Holdings, you can compare the effects of market volatilities on APAC Resources and Galaxy Digital 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 APAC Resources with a short position of Galaxy Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of APAC Resources and Galaxy Digital.

Diversification Opportunities for APAC Resources and Galaxy Digital

0.61

Correlation Coefficient

APAC Resources  Galaxy Digital

Poor diversification

The 3 months correlation between APAC and Galaxy is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding APAC Resources Limited and Galaxy Digital Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Digital Holdings and APAC Resources 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 APAC Resources Limited are associated (or correlated) with Galaxy Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Digital Holdings has no effect on the direction of APAC Resources i.e., APAC Resources and Galaxy Digital go up and down completely randomly.

Pair Corralation between APAC Resources and Galaxy Digital

Assuming the 90 days horizon APAC Resources Limited is expected to generate 4.9 times more return on investment than Galaxy Digital. However, APAC Resources is 4.9 times more volatile than Galaxy Digital Holdings. It trades about 0.06 of its potential returns per unit of risk. Galaxy Digital Holdings is currently generating about 0.1 per unit of risk. If you would invest  14.00  in APAC Resources Limited on September 4, 2024 and sell it today you would lose (3.00) from holding APAC Resources Limited or give up 21.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	87.88%
Values	Daily Returns

APAC Resources Limited  vs.  Galaxy Digital Holdings

APAC Resources

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days APAC Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly conflicting fundamental indicators, APAC Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Galaxy Digital Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Digital Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Galaxy Digital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APAC Resources and Galaxy Digital

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

The idea behind APAC Resources Limited and Galaxy Digital 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 Stocks Directory module to find actively traded stocks across global markets.