Correlation Between INDIKA ENERGY and Apollo Investment

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

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

Diversification Opportunities for INDIKA ENERGY and Apollo Investment

-0.84

Correlation Coefficient

INDIKA ENERGY  Apollo Investment

Pay attention - limited upside

The 3 months correlation between INDIKA and Apollo is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding INDIKA ENERGY and Apollo Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Investment Corp and INDIKA ENERGY 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 INDIKA ENERGY are associated (or correlated) with Apollo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Investment Corp has no effect on the direction of INDIKA ENERGY i.e., INDIKA ENERGY and Apollo Investment go up and down completely randomly.

Pair Corralation between INDIKA ENERGY and Apollo Investment

Assuming the 90 days trading horizon INDIKA ENERGY is expected to generate 3.44 times more return on investment than Apollo Investment. However, INDIKA ENERGY is 3.44 times more volatile than Apollo Investment Corp. It trades about 0.09 of its potential returns per unit of risk. Apollo Investment Corp is currently generating about -0.08 per unit of risk. If you would invest  7.55  in INDIKA ENERGY on October 4, 2024 and sell it today you would earn a total of  0.30  from holding INDIKA ENERGY or generate 3.97% return on investment over 90 days.

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

INDIKA ENERGY  vs.  Apollo Investment Corp

INDIKA ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDIKA ENERGY 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 rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Apollo Investment Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Investment Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Apollo Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with INDIKA ENERGY and Apollo Investment

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

The idea behind INDIKA ENERGY and Apollo Investment 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.