Correlation Between Apex Mining and Integrated Micro

Can any of the company-specific risk be diversified away by investing in both Apex Mining and Integrated Micro 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 Integrated Micro 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 Integrated Micro Electronics, you can compare the effects of market volatilities on Apex Mining and Integrated Micro 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 Integrated Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apex Mining and Integrated Micro.

Diversification Opportunities for Apex Mining and Integrated Micro

0.51

Correlation Coefficient

Apex Mining  Integrated Micro

Very weak diversification

The 3 months correlation between Apex and Integrated is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Apex Mining Co and Integrated Micro Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Micro Ele 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 Integrated Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Micro Ele has no effect on the direction of Apex Mining i.e., Apex Mining and Integrated Micro go up and down completely randomly.

Pair Corralation between Apex Mining and Integrated Micro

Assuming the 90 days trading horizon Apex Mining Co is expected to under-perform the Integrated Micro. But the stock apears to be less risky and, when comparing its historical volatility, Apex Mining Co is 1.43 times less risky than Integrated Micro. The stock trades about -0.1 of its potential returns per unit of risk. The Integrated Micro Electronics is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  172.00  in Integrated Micro Electronics on August 31, 2024 and sell it today you would lose (8.00) from holding Integrated Micro Electronics or give up 4.65% of portfolio value over 90 days.

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

Apex Mining Co  vs.  Integrated Micro Electronics

Apex Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apex Mining Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Integrated Micro Ele

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Micro Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Integrated Micro 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 Integrated Micro

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

The idea behind Apex Mining Co and Integrated Micro Electronics 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.