Correlation Between Evertec and Apptech Corp

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

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

Diversification Opportunities for Evertec and Apptech Corp

-0.31

Correlation Coefficient

Evertec  Apptech Corp

Very good diversification

The 3 months correlation between Evertec and Apptech is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Evertec and Apptech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apptech Corp and Evertec 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 Evertec are associated (or correlated) with Apptech Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apptech Corp has no effect on the direction of Evertec i.e., Evertec and Apptech Corp go up and down completely randomly.

Pair Corralation between Evertec and Apptech Corp

Given the investment horizon of 90 days Evertec is expected to generate 0.22 times more return on investment than Apptech Corp. However, Evertec is 4.58 times less risky than Apptech Corp. It trades about -0.04 of its potential returns per unit of risk. Apptech Corp is currently generating about -0.01 per unit of risk. If you would invest  3,866  in Evertec on October 25, 2024 and sell it today you would lose (616.00) from holding Evertec or give up 15.93% of portfolio value over 90 days.

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

Evertec  vs.  Apptech Corp

Evertec

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Evertec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Evertec is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Apptech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apptech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Evertec and Apptech Corp

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

The idea behind Evertec and Apptech Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.