Correlation Between CMC Investment and APG Securities

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

By analyzing existing cross correlation between CMC Investment JSC and APG Securities Joint, you can compare the effects of market volatilities on CMC Investment and APG Securities 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 CMC Investment with a short position of APG Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Investment and APG Securities.

Diversification Opportunities for CMC Investment and APG Securities

-0.04

Correlation Coefficient

CMC Investment  APG Securities

Good diversification

The 3 months correlation between CMC and APG is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CMC Investment JSC and APG Securities Joint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APG Securities Joint and CMC Investment 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 CMC Investment JSC are associated (or correlated) with APG Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APG Securities Joint has no effect on the direction of CMC Investment i.e., CMC Investment and APG Securities go up and down completely randomly.

Pair Corralation between CMC Investment and APG Securities

Assuming the 90 days trading horizon CMC Investment JSC is expected to generate 1.52 times more return on investment than APG Securities. However, CMC Investment is 1.52 times more volatile than APG Securities Joint. It trades about 0.02 of its potential returns per unit of risk. APG Securities Joint is currently generating about -0.08 per unit of risk. If you would invest  620,000  in CMC Investment JSC on October 25, 2024 and sell it today you would lose (10,000) from holding CMC Investment JSC or give up 1.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CMC Investment JSC  vs.  APG Securities Joint

CMC Investment JSC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CMC Investment JSC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, CMC Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

APG Securities Joint

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APG Securities Joint has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CMC Investment and APG Securities

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

The idea behind CMC Investment JSC and APG Securities Joint 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 CEOs Directory module to screen CEOs from public companies around the world.