Correlation Between Aptech and State Trading

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

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

Diversification Opportunities for Aptech and State Trading

0.59

Correlation Coefficient

Aptech  State Trading

Very weak diversification

The 3 months correlation between Aptech and State is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Aptech Limited and The State Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Trading and Aptech 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 Aptech Limited are associated (or correlated) with State Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Trading has no effect on the direction of Aptech i.e., Aptech and State Trading go up and down completely randomly.

Pair Corralation between Aptech and State Trading

Assuming the 90 days trading horizon Aptech is expected to generate 7.49 times less return on investment than State Trading. In addition to that, Aptech is 1.19 times more volatile than The State Trading. It trades about 0.01 of its total potential returns per unit of risk. The State Trading is currently generating about 0.05 per unit of volatility. If you would invest  9,045  in The State Trading on October 4, 2024 and sell it today you would earn a total of  6,155  from holding The State Trading or generate 68.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

Aptech Limited  vs.  The State Trading

Aptech Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

State Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The State Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, State Trading is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Aptech and State Trading

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

The idea behind Aptech Limited and The State Trading 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.