Correlation Between Honeywell Automation and Apex Frozen

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

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

Diversification Opportunities for Honeywell Automation and Apex Frozen

0.8

Correlation Coefficient

Honeywell Automation  Apex Frozen

Very poor diversification

The 3 months correlation between Honeywell and Apex is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Honeywell Automation India 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 Honeywell Automation 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 Honeywell Automation India 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 Honeywell Automation i.e., Honeywell Automation and Apex Frozen go up and down completely randomly.

Pair Corralation between Honeywell Automation and Apex Frozen

Assuming the 90 days trading horizon Honeywell Automation India is expected to under-perform the Apex Frozen. But the stock apears to be less risky and, when comparing its historical volatility, Honeywell Automation India is 1.99 times less risky than Apex Frozen. The stock trades about -0.17 of its potential returns per unit of risk. The Apex Frozen Foods is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  23,582  in Apex Frozen Foods on December 2, 2024 and sell it today you would lose (3,907) from holding Apex Frozen Foods or give up 16.57% of portfolio value over 90 days.

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

Honeywell Automation India  vs.  Apex Frozen Foods

Honeywell Automation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Honeywell Automation India has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Apex Frozen Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apex Frozen Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Honeywell Automation and Apex Frozen

The main advantage of trading using opposite Honeywell Automation and Apex Frozen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honeywell Automation 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 Honeywell Automation India 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 Global Correlations module to find global opportunities by holding instruments from different markets.