Correlation Between Central Pacific and Apollo Bancorp

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

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

Diversification Opportunities for Central Pacific and Apollo Bancorp

-0.03

Correlation Coefficient

Central Pacific  Apollo Bancorp

Good diversification

The 3 months correlation between Central and Apollo is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Central Pacific Financial and Apollo Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Bancorp and Central Pacific 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 Central Pacific Financial are associated (or correlated) with Apollo Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Bancorp has no effect on the direction of Central Pacific i.e., Central Pacific and Apollo Bancorp go up and down completely randomly.

Pair Corralation between Central Pacific and Apollo Bancorp

Considering the 90-day investment horizon Central Pacific Financial is expected to under-perform the Apollo Bancorp. In addition to that, Central Pacific is 1.04 times more volatile than Apollo Bancorp. It trades about -0.03 of its total potential returns per unit of risk. Apollo Bancorp is currently generating about 0.16 per unit of volatility. If you would invest  3,400  in Apollo Bancorp on December 28, 2024 and sell it today you would earn a total of  600.00  from holding Apollo Bancorp or generate 17.65% return on investment over 90 days.

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

Central Pacific Financial  vs.  Apollo Bancorp

Central Pacific Financial

Risk-Adjusted Performance

Very Weak

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

Apollo Bancorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Bancorp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Apollo Bancorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Central Pacific and Apollo Bancorp

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

The idea behind Central Pacific Financial and Apollo Bancorp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.