Correlation Between Brookfield and Aptose Biosciences

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

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

Diversification Opportunities for Brookfield and Aptose Biosciences

-0.81

Correlation Coefficient

Brookfield  Aptose Biosciences

Pay attention - limited upside

The 3 months correlation between Brookfield and Aptose is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield and Aptose Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptose Biosciences and Brookfield 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 Brookfield are associated (or correlated) with Aptose Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptose Biosciences has no effect on the direction of Brookfield i.e., Brookfield and Aptose Biosciences go up and down completely randomly.

Pair Corralation between Brookfield and Aptose Biosciences

Assuming the 90 days trading horizon Brookfield is expected to generate 0.06 times more return on investment than Aptose Biosciences. However, Brookfield is 16.4 times less risky than Aptose Biosciences. It trades about 0.22 of its potential returns per unit of risk. Aptose Biosciences is currently generating about -0.01 per unit of risk. If you would invest  2,265  in Brookfield on October 10, 2024 and sell it today you would earn a total of  218.00  from holding Brookfield or generate 9.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Brookfield  vs.  Aptose Biosciences

Brookfield

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brookfield may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aptose Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptose Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Brookfield and Aptose Biosciences

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

The idea behind Brookfield and Aptose Biosciences 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.