Correlation Between Persistent Systems and Apex Frozen

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

By analyzing existing cross correlation between Persistent Systems Limited and Apex Frozen Foods, you can compare the effects of market volatilities on Persistent Systems and Apex Frozen 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 Persistent Systems with a short position of Apex Frozen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Persistent Systems and Apex Frozen.

Diversification Opportunities for Persistent Systems and Apex Frozen

-0.49

Correlation Coefficient

Persistent Systems  Apex Frozen

Very good diversification

The 3 months correlation between Persistent and Apex is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Persistent Systems Limited and Apex Frozen Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apex Frozen Foods and Persistent Systems 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 Persistent Systems Limited are associated (or correlated) with Apex Frozen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apex Frozen Foods has no effect on the direction of Persistent Systems i.e., Persistent Systems and Apex Frozen go up and down completely randomly.

Pair Corralation between Persistent Systems and Apex Frozen

Assuming the 90 days trading horizon Persistent Systems Limited is expected to generate 0.7 times more return on investment than Apex Frozen. However, Persistent Systems Limited is 1.43 times less risky than Apex Frozen. It trades about 0.13 of its potential returns per unit of risk. Apex Frozen Foods is currently generating about 0.03 per unit of risk. If you would invest  323,692  in Persistent Systems Limited on September 4, 2024 and sell it today you would earn a total of  280,438  from holding Persistent Systems Limited or generate 86.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

Persistent Systems Limited  vs.  Apex Frozen Foods

Persistent Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Persistent Systems Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Persistent Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apex Frozen Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apex Frozen Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic 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 Persistent Systems and Apex Frozen

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

The idea behind Persistent Systems Limited and Apex Frozen Foods 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.