Correlation Between First Abacus and Apollo Global

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

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

Diversification Opportunities for First Abacus and Apollo Global

0.27

Correlation Coefficient

First Abacus  Apollo Global

Modest diversification

The 3 months correlation between First and Apollo is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Abacus Financial and Apollo Global Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Global Capital and First Abacus 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 First Abacus Financial are associated (or correlated) with Apollo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Global Capital has no effect on the direction of First Abacus i.e., First Abacus and Apollo Global go up and down completely randomly.

Pair Corralation between First Abacus and Apollo Global

Assuming the 90 days trading horizon First Abacus is expected to generate 1.38 times less return on investment than Apollo Global. But when comparing it to its historical volatility, First Abacus Financial is 1.36 times less risky than Apollo Global. It trades about 0.03 of its potential returns per unit of risk. Apollo Global Capital is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.43  in Apollo Global Capital on December 30, 2024 and sell it today you would lose (0.01) from holding Apollo Global Capital or give up 2.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	30.65%
Values	Daily Returns

First Abacus Financial  vs.  Apollo Global Capital

First Abacus Financial

Risk-Adjusted Performance

Weak

Over the last 90 days First Abacus Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady technical and fundamental indicators, First Abacus may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Apollo Global Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Global Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Apollo Global exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Abacus and Apollo Global

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

The idea behind First Abacus Financial and Apollo Global Capital 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.