Correlation Between Beta Drugs and Apex Frozen

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

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

Diversification Opportunities for Beta Drugs and Apex Frozen

0.11

Correlation Coefficient

Beta Drugs  Apex Frozen

Average diversification

The 3 months correlation between Beta and Apex is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Beta Drugs 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 Beta Drugs 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 Beta Drugs 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 Beta Drugs i.e., Beta Drugs and Apex Frozen go up and down completely randomly.

Pair Corralation between Beta Drugs and Apex Frozen

Assuming the 90 days trading horizon Beta Drugs is expected to generate 2.29 times less return on investment than Apex Frozen. But when comparing it to its historical volatility, Beta Drugs is 1.19 times less risky than Apex Frozen. It trades about 0.13 of its potential returns per unit of risk. Apex Frozen Foods is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  23,140  in Apex Frozen Foods on September 19, 2024 and sell it today you would earn a total of  3,651  from holding Apex Frozen Foods or generate 15.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Beta Drugs  vs.  Apex Frozen Foods

Beta Drugs

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beta Drugs are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Beta Drugs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apex Frozen Foods

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apex Frozen Foods are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Apex Frozen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Beta Drugs and Apex Frozen

The main advantage of trading using opposite Beta Drugs and Apex Frozen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beta Drugs 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 Beta Drugs 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.