Correlation Between Axis Technologies and APAC Resources

Can any of the company-specific risk be diversified away by investing in both Axis Technologies and APAC Resources 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 Axis Technologies and APAC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Axis Technologies Group and APAC Resources Limited, you can compare the effects of market volatilities on Axis Technologies and APAC Resources 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 Axis Technologies with a short position of APAC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axis Technologies and APAC Resources.

Diversification Opportunities for Axis Technologies and APAC Resources

0.2

Correlation Coefficient

Axis Technologies  APAC Resources

Modest diversification

The 3 months correlation between Axis and APAC is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Axis Technologies Group and APAC Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APAC Resources and Axis Technologies 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 Axis Technologies Group are associated (or correlated) with APAC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APAC Resources has no effect on the direction of Axis Technologies i.e., Axis Technologies and APAC Resources go up and down completely randomly.

Pair Corralation between Axis Technologies and APAC Resources

If you would invest  0.12  in Axis Technologies Group on September 12, 2024 and sell it today you would earn a total of  0.02  from holding Axis Technologies Group or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	38.1%
Values	Daily Returns

Axis Technologies Group  vs.  APAC Resources Limited

Axis Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Axis Technologies Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Axis Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

APAC Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Axis Technologies and APAC Resources

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

The idea behind Axis Technologies Group and APAC Resources Limited 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.