Correlation Between Aptose Biosciences and European Residential

Can any of the company-specific risk be diversified away by investing in both Aptose Biosciences and European Residential 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 Aptose Biosciences and European Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aptose Biosciences and European Residential Real, you can compare the effects of market volatilities on Aptose Biosciences and European Residential 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 Aptose Biosciences with a short position of European Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptose Biosciences and European Residential.

Diversification Opportunities for Aptose Biosciences and European Residential

-0.32

Correlation Coefficient

Aptose Biosciences  European Residential

Very good diversification

The 3 months correlation between Aptose and European is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Aptose Biosciences and European Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Residential Real and Aptose Biosciences 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 Aptose Biosciences are associated (or correlated) with European Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Residential Real has no effect on the direction of Aptose Biosciences i.e., Aptose Biosciences and European Residential go up and down completely randomly.

Pair Corralation between Aptose Biosciences and European Residential

Assuming the 90 days trading horizon Aptose Biosciences is expected to generate 2.01 times more return on investment than European Residential. However, Aptose Biosciences is 2.01 times more volatile than European Residential Real. It trades about 0.1 of its potential returns per unit of risk. European Residential Real is currently generating about -0.16 per unit of risk. If you would invest  29.00  in Aptose Biosciences on October 10, 2024 and sell it today you would earn a total of  4.00  from holding Aptose Biosciences or generate 13.79% return on investment over 90 days.

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

Aptose Biosciences  vs.  European Residential Real

Aptose Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptose Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

European Residential Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Residential Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Aptose Biosciences and European Residential

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

The idea behind Aptose Biosciences and European Residential Real 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.