Correlation Between Industrial Investment and Aptech

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

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

Diversification Opportunities for Industrial Investment and Aptech

-0.76

Correlation Coefficient

Industrial Investment  Aptech

Pay attention - limited upside

The 3 months correlation between Industrial and Aptech is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Aptech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptech Limited and Industrial Investment 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 Industrial Investment Trust are associated (or correlated) with Aptech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptech Limited has no effect on the direction of Industrial Investment i.e., Industrial Investment and Aptech go up and down completely randomly.

Pair Corralation between Industrial Investment and Aptech

Assuming the 90 days trading horizon Industrial Investment Trust is expected to generate 0.92 times more return on investment than Aptech. However, Industrial Investment Trust is 1.09 times less risky than Aptech. It trades about 0.12 of its potential returns per unit of risk. Aptech Limited is currently generating about -0.04 per unit of risk. If you would invest  18,920  in Industrial Investment Trust on September 25, 2024 and sell it today you would earn a total of  19,205  from holding Industrial Investment Trust or generate 101.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.18%
Values	Daily Returns

Industrial Investment Trust  vs.  Aptech Limited

Industrial Investment

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aptech Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Industrial Investment and Aptech

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

The idea behind Industrial Investment Trust and Aptech Limited 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..