Correlation Between Aptos and API3

Can any of the company-specific risk be diversified away by investing in both Aptos and API3 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 Aptos and API3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aptos and API3, you can compare the effects of market volatilities on Aptos and API3 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 Aptos with a short position of API3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptos and API3.

Diversification Opportunities for Aptos and API3

0.94

Correlation Coefficient

Aptos  API3

Almost no diversification

The 3 months correlation between Aptos and API3 is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Aptos and API3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on API3 and Aptos 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 Aptos are associated (or correlated) with API3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of API3 has no effect on the direction of Aptos i.e., Aptos and API3 go up and down completely randomly.

Pair Corralation between Aptos and API3

Assuming the 90 days trading horizon Aptos is expected to under-perform the API3. But the crypto coin apears to be less risky and, when comparing its historical volatility, Aptos is 1.84 times less risky than API3. The crypto coin trades about -0.09 of its potential returns per unit of risk. The API3 is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  167.00  in API3 on December 26, 2024 and sell it today you would lose (45.00) from holding API3 or give up 26.95% of portfolio value over 90 days.

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

Aptos  vs.  API3

Aptos

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aptos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Aptos shareholders.

API3

Risk-Adjusted Performance

Very Weak

Over the last 90 days API3 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, API3 is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aptos and API3

The main advantage of trading using opposite Aptos and API3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptos position performs unexpectedly, API3 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 API3 will offset losses from the drop in API3's long position.

The idea behind Aptos and API3 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.