Correlation Between Aptitude Software and Revolution Beauty

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

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

Diversification Opportunities for Aptitude Software and Revolution Beauty

0.2

Correlation Coefficient

Aptitude Software  Revolution Beauty

Modest diversification

The 3 months correlation between Aptitude and Revolution is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aptitude Software Group and Revolution Beauty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolution Beauty and Aptitude Software 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 Aptitude Software Group are associated (or correlated) with Revolution Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolution Beauty has no effect on the direction of Aptitude Software i.e., Aptitude Software and Revolution Beauty go up and down completely randomly.

Pair Corralation between Aptitude Software and Revolution Beauty

Assuming the 90 days trading horizon Aptitude Software Group is expected to under-perform the Revolution Beauty. But the stock apears to be less risky and, when comparing its historical volatility, Aptitude Software Group is 2.84 times less risky than Revolution Beauty. The stock trades about -0.18 of its potential returns per unit of risk. The Revolution Beauty Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,450  in Revolution Beauty Group on December 26, 2024 and sell it today you would lose (146.00) from holding Revolution Beauty Group or give up 10.07% of portfolio value over 90 days.

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

Aptitude Software Group  vs.  Revolution Beauty Group

Aptitude Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aptitude Software Group 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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Revolution Beauty

Risk-Adjusted Performance

Weak

Over the last 90 days Revolution Beauty Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Revolution Beauty is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aptitude Software and Revolution Beauty

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

The idea behind Aptitude Software Group and Revolution Beauty Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.