Correlation Between Indiana Resources and APA
Can any of the company-specific risk be diversified away by investing in both Indiana Resources and APA 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 Indiana Resources and APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indiana Resources and APA Group, you can compare the effects of market volatilities on Indiana Resources and APA 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 Indiana Resources with a short position of APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indiana Resources and APA.
Diversification Opportunities for Indiana Resources and APA
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Indiana and APA is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Indiana Resources and APA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Group and Indiana Resources 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 Indiana Resources are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Group has no effect on the direction of Indiana Resources i.e., Indiana Resources and APA go up and down completely randomly.
Pair Corralation between Indiana Resources and APA
Assuming the 90 days trading horizon Indiana Resources is expected to generate 2.01 times more return on investment than APA. However, Indiana Resources is 2.01 times more volatile than APA Group. It trades about 0.11 of its potential returns per unit of risk. APA Group is currently generating about -0.02 per unit of risk. If you would invest 5.18 in Indiana Resources on September 14, 2024 and sell it today you would earn a total of 0.92 from holding Indiana Resources or generate 17.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Indiana Resources vs. APA Group
Performance |
Timeline |
Indiana Resources |
APA Group |
Indiana Resources and APA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Indiana Resources and APA
The main advantage of trading using opposite Indiana Resources and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indiana Resources position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.Indiana Resources vs. National Australia Bank | Indiana Resources vs. Bank of Queensland | Indiana Resources vs. Prime Financial Group | Indiana Resources vs. Finexia Financial Group |
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Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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