Correlation Between NYSE Composite and Aperam PK

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

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

Diversification Opportunities for NYSE Composite and Aperam PK

-0.08

Correlation Coefficient

NYSE Composite  Aperam PK

Good diversification

The 3 months correlation between NYSE and Aperam is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Aperam PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aperam PK and NYSE Composite 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 NYSE Composite are associated (or correlated) with Aperam PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aperam PK has no effect on the direction of NYSE Composite i.e., NYSE Composite and Aperam PK go up and down completely randomly.

Pair Corralation between NYSE Composite and Aperam PK

Assuming the 90 days trading horizon NYSE Composite is expected to generate 22.01 times less return on investment than Aperam PK. But when comparing it to its historical volatility, NYSE Composite is 2.06 times less risky than Aperam PK. It trades about 0.02 of its potential returns per unit of risk. Aperam PK is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,590  in Aperam PK on December 30, 2024 and sell it today you would earn a total of  755.00  from holding Aperam PK or generate 29.15% return on investment over 90 days.

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

NYSE Composite  vs.  Aperam PK

Pair Trading with NYSE Composite and Aperam PK

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

The idea behind NYSE Composite and Aperam PK 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..