Correlation Between APN Convenience and New Zealand

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

By analyzing existing cross correlation between APN Convenience Retail and New Zealand Oil, you can compare the effects of market volatilities on APN Convenience and New Zealand 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 APN Convenience with a short position of New Zealand. Check out your portfolio center. Please also check ongoing floating volatility patterns of APN Convenience and New Zealand.

Diversification Opportunities for APN Convenience and New Zealand

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Correlation Coefficient

APN Convenience  New Zealand

Pay attention - limited upside

The 3 months correlation between APN and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding APN Convenience Retail and New Zealand Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Zealand Oil and APN Convenience 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 APN Convenience Retail are associated (or correlated) with New Zealand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Zealand Oil has no effect on the direction of APN Convenience i.e., APN Convenience and New Zealand go up and down completely randomly.

Pair Corralation between APN Convenience and New Zealand

If you would invest (100.00) in New Zealand Oil on November 29, 2024 and sell it today you would earn a total of  100.00  from holding New Zealand Oil or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

APN Convenience Retail  vs.  New Zealand Oil

APN Convenience Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days APN Convenience Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, APN Convenience is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

New Zealand Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Zealand Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, New Zealand is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with APN Convenience and New Zealand

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

The idea behind APN Convenience Retail and New Zealand Oil 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.