Correlation Between Kogeneracja and APS Energia

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

By analyzing existing cross correlation between Kogeneracja SA and APS Energia SA, you can compare the effects of market volatilities on Kogeneracja and APS Energia 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 Kogeneracja with a short position of APS Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kogeneracja and APS Energia.

Diversification Opportunities for Kogeneracja and APS Energia

-0.6

Correlation Coefficient

Kogeneracja  APS Energia

Excellent diversification

The 3 months correlation between Kogeneracja and APS is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Kogeneracja SA and APS Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Energia SA and Kogeneracja 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 Kogeneracja SA are associated (or correlated) with APS Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Energia SA has no effect on the direction of Kogeneracja i.e., Kogeneracja and APS Energia go up and down completely randomly.

Pair Corralation between Kogeneracja and APS Energia

Assuming the 90 days trading horizon Kogeneracja SA is expected to generate 1.05 times more return on investment than APS Energia. However, Kogeneracja is 1.05 times more volatile than APS Energia SA. It trades about 0.07 of its potential returns per unit of risk. APS Energia SA is currently generating about -0.03 per unit of risk. If you would invest  5,290  in Kogeneracja SA on September 3, 2024 and sell it today you would earn a total of  690.00  from holding Kogeneracja SA or generate 13.04% return on investment over 90 days.

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

Kogeneracja SA  vs.  APS Energia SA

Kogeneracja SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kogeneracja SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Kogeneracja reported solid returns over the last few months and may actually be approaching a breakup point.

APS Energia SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APS Energia SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, APS Energia is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kogeneracja and APS Energia

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

The idea behind Kogeneracja SA and APS Energia SA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.