Correlation Between Harding Loevner and Api Short

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

By analyzing existing cross correlation between Harding Loevner Global and Api Short Term, you can compare the effects of market volatilities on Harding Loevner and Api Short 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 Harding Loevner with a short position of Api Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harding Loevner and Api Short.

Diversification Opportunities for Harding Loevner and Api Short

0.02

Correlation Coefficient

Harding Loevner  Api Short

Significant diversification

The 3 months correlation between Harding and Api is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Harding Loevner Global and Api Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Api Short Term and Harding Loevner 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 Harding Loevner Global are associated (or correlated) with Api Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Api Short Term has no effect on the direction of Harding Loevner i.e., Harding Loevner and Api Short go up and down completely randomly.

Pair Corralation between Harding Loevner and Api Short

Assuming the 90 days horizon Harding Loevner is expected to generate 3.66 times less return on investment than Api Short. In addition to that, Harding Loevner is 5.56 times more volatile than Api Short Term. It trades about 0.01 of its total potential returns per unit of risk. Api Short Term is currently generating about 0.19 per unit of volatility. If you would invest  382.00  in Api Short Term on December 19, 2024 and sell it today you would earn a total of  7.00  from holding Api Short Term or generate 1.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Harding Loevner Global  vs.  Api Short Term

Harding Loevner Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harding Loevner Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Harding Loevner is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Api Short Term

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Api Short Term are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Api Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Harding Loevner and Api Short

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

The idea behind Harding Loevner Global and Api Short Term 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.