Correlation Between APT Satellite and Verizon Communications

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

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

Diversification Opportunities for APT Satellite and Verizon Communications

0.0

Correlation Coefficient

APT Satellite  Verizon Communications

Pay attention - limited upside

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

Pair Corralation between APT Satellite and Verizon Communications

If you would invest  3,925  in Verizon Communications on December 19, 2024 and sell it today you would earn a total of  487.50  from holding Verizon Communications or generate 12.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

APT Satellite Holdings  vs.  Verizon Communications

APT Satellite Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days APT Satellite Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, APT Satellite is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Verizon Communications

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Verizon Communications are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Verizon Communications showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APT Satellite and Verizon Communications

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

The idea behind APT Satellite Holdings and Verizon Communications 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.