Correlation Between Aptamer Group and Toyota

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

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

Diversification Opportunities for Aptamer Group and Toyota

0.62

Correlation Coefficient

Aptamer Group  Toyota

Poor diversification

The 3 months correlation between Aptamer and Toyota is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aptamer Group PLC and Toyota Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor Corp and Aptamer Group 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 Aptamer Group PLC are associated (or correlated) with Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor Corp has no effect on the direction of Aptamer Group i.e., Aptamer Group and Toyota go up and down completely randomly.

Pair Corralation between Aptamer Group and Toyota

Assuming the 90 days trading horizon Aptamer Group PLC is expected to under-perform the Toyota. In addition to that, Aptamer Group is 3.67 times more volatile than Toyota Motor Corp. It trades about -0.07 of its total potential returns per unit of risk. Toyota Motor Corp is currently generating about 0.06 per unit of volatility. If you would invest  179,108  in Toyota Motor Corp on October 12, 2024 and sell it today you would earn a total of  117,892  from holding Toyota Motor Corp or generate 65.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.19%
Values	Daily Returns

Aptamer Group PLC  vs.  Toyota Motor Corp

Aptamer Group PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aptamer Group PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Aptamer Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Toyota Motor Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Toyota Motor Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Toyota exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptamer Group and Toyota

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

The idea behind Aptamer Group PLC and Toyota Motor 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.