Correlation Between BIG Blockchain and APAC Resources

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

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

Diversification Opportunities for BIG Blockchain and APAC Resources

0.57

Correlation Coefficient

BIG Blockchain  APAC Resources

Very weak diversification

The 3 months correlation between BIG and APAC is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding BIG Blockchain Intelligence and APAC Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APAC Resources and BIG Blockchain 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 BIG Blockchain Intelligence 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 BIG Blockchain i.e., BIG Blockchain and APAC Resources go up and down completely randomly.

Pair Corralation between BIG Blockchain and APAC Resources

Assuming the 90 days horizon BIG Blockchain Intelligence is expected to generate 2.04 times more return on investment than APAC Resources. However, BIG Blockchain is 2.04 times more volatile than APAC Resources Limited. It trades about 0.01 of its potential returns per unit of risk. APAC Resources Limited is currently generating about -0.01 per unit of risk. If you would invest  19.00  in BIG Blockchain Intelligence on September 4, 2024 and sell it today you would lose (5.00) from holding BIG Blockchain Intelligence or give up 26.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.76%
Values	Daily Returns

BIG Blockchain Intelligence  vs.  APAC Resources Limited

BIG Blockchain Intel

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BIG Blockchain Intelligence are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, BIG Blockchain reported solid returns over the last few months and may actually be approaching a breakup point.

APAC Resources

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days APAC Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly conflicting fundamental indicators, APAC Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BIG Blockchain and APAC Resources

The main advantage of trading using opposite BIG Blockchain and APAC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BIG Blockchain 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 BIG Blockchain Intelligence 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.