Correlation Between Apex Mining and COL Financial

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

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

Diversification Opportunities for Apex Mining and COL Financial

-0.37

Correlation Coefficient

Apex Mining  COL Financial

Very good diversification

The 3 months correlation between Apex and COL is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Apex Mining Co and COL Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COL Financial Group and Apex Mining 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 Apex Mining Co are associated (or correlated) with COL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COL Financial Group has no effect on the direction of Apex Mining i.e., Apex Mining and COL Financial go up and down completely randomly.

Pair Corralation between Apex Mining and COL Financial

Assuming the 90 days trading horizon Apex Mining Co is expected to generate 1.09 times more return on investment than COL Financial. However, Apex Mining is 1.09 times more volatile than COL Financial Group. It trades about 0.27 of its potential returns per unit of risk. COL Financial Group is currently generating about -0.03 per unit of risk. If you would invest  351.00  in Apex Mining Co on December 28, 2024 and sell it today you would earn a total of  148.00  from holding Apex Mining Co or generate 42.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Apex Mining Co  vs.  COL Financial Group

Apex Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apex Mining Co are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Apex Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

COL Financial Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Apex Mining and COL Financial

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

The idea behind Apex Mining Co and COL Financial 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 Transaction History module to view history of all your transactions and understand their impact on performance.