Correlation Between APT Systems and Duo World

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

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

Diversification Opportunities for APT Systems and Duo World

0.09

Correlation Coefficient

APT Systems  Duo World

Significant diversification

The 3 months correlation between APT and Duo is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding APT Systems and Duo World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duo World and APT Systems 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 APT Systems are associated (or correlated) with Duo World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duo World has no effect on the direction of APT Systems i.e., APT Systems and Duo World go up and down completely randomly.

Pair Corralation between APT Systems and Duo World

Given the investment horizon of 90 days APT Systems is expected to generate 0.9 times more return on investment than Duo World. However, APT Systems is 1.11 times less risky than Duo World. It trades about 0.05 of its potential returns per unit of risk. Duo World is currently generating about 0.02 per unit of risk. If you would invest  0.23  in APT Systems on October 10, 2024 and sell it today you would lose (0.18) from holding APT Systems or give up 78.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

APT Systems  vs.  Duo World

APT Systems

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in APT Systems are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, APT Systems showed solid returns over the last few months and may actually be approaching a breakup point.

Duo World

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duo World has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with APT Systems and Duo World

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

The idea behind APT Systems and Duo World 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.