Correlation Between Associated Alcohols and Apex Frozen

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

By analyzing existing cross correlation between Associated Alcohols Breweries and Apex Frozen Foods, you can compare the effects of market volatilities on Associated Alcohols and Apex Frozen 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 Associated Alcohols with a short position of Apex Frozen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Alcohols and Apex Frozen.

Diversification Opportunities for Associated Alcohols and Apex Frozen

0.56

Correlation Coefficient

Associated Alcohols  Apex Frozen

Very weak diversification

The 3 months correlation between Associated and Apex is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Associated Alcohols Breweries and Apex Frozen Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apex Frozen Foods and Associated Alcohols 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 Associated Alcohols Breweries are associated (or correlated) with Apex Frozen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apex Frozen Foods has no effect on the direction of Associated Alcohols i.e., Associated Alcohols and Apex Frozen go up and down completely randomly.

Pair Corralation between Associated Alcohols and Apex Frozen

Assuming the 90 days trading horizon Associated Alcohols Breweries is expected to generate 0.68 times more return on investment than Apex Frozen. However, Associated Alcohols Breweries is 1.47 times less risky than Apex Frozen. It trades about 0.14 of its potential returns per unit of risk. Apex Frozen Foods is currently generating about 0.04 per unit of risk. If you would invest  103,600  in Associated Alcohols Breweries on October 6, 2024 and sell it today you would earn a total of  8,005  from holding Associated Alcohols Breweries or generate 7.73% return on investment over 90 days.

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

Associated Alcohols Breweries  vs.  Apex Frozen Foods

Associated Alcohols

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Alcohols Breweries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental indicators, Associated Alcohols reported solid returns over the last few months and may actually be approaching a breakup point.

Apex Frozen Foods

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apex Frozen Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Apex Frozen unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Associated Alcohols and Apex Frozen

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

The idea behind Associated Alcohols Breweries and Apex Frozen Foods 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..