Correlation Between Genus Paper and Apex Frozen

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

By analyzing existing cross correlation between Genus Paper Boards and Apex Frozen Foods, you can compare the effects of market volatilities on Genus Paper and Apex Frozen 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 Genus Paper with a short position of Apex Frozen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genus Paper and Apex Frozen.

Diversification Opportunities for Genus Paper and Apex Frozen

0.53

Correlation Coefficient

Genus Paper  Apex Frozen

Very weak diversification

The 3 months correlation between Genus and Apex is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Genus Paper Boards and Apex Frozen Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apex Frozen Foods and Genus Paper 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 Genus Paper Boards are associated (or correlated) with Apex Frozen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apex Frozen Foods has no effect on the direction of Genus Paper i.e., Genus Paper and Apex Frozen go up and down completely randomly.

Pair Corralation between Genus Paper and Apex Frozen

Assuming the 90 days trading horizon Genus Paper Boards is expected to under-perform the Apex Frozen. But the stock apears to be less risky and, when comparing its historical volatility, Genus Paper Boards is 1.43 times less risky than Apex Frozen. The stock trades about -0.02 of its potential returns per unit of risk. The Apex Frozen Foods is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  24,017  in Apex Frozen Foods on October 26, 2024 and sell it today you would earn a total of  778.00  from holding Apex Frozen Foods or generate 3.24% return on investment over 90 days.

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

Genus Paper Boards  vs.  Apex Frozen Foods

Genus Paper Boards

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genus Paper Boards has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Genus Paper is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Apex Frozen Foods

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apex Frozen Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Apex Frozen may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Genus Paper and Apex Frozen

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

The idea behind Genus Paper Boards and Apex Frozen Foods 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.