Correlation Between SIMPAR SA and APA

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

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

Diversification Opportunities for SIMPAR SA and APA

0.25

Correlation Coefficient

SIMPAR SA  APA

Modest diversification

The 3 months correlation between SIMPAR and APA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SIMPAR SA and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation and SIMPAR SA 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 SIMPAR SA 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 Corporation has no effect on the direction of SIMPAR SA i.e., SIMPAR SA and APA go up and down completely randomly.

Pair Corralation between SIMPAR SA and APA

Assuming the 90 days trading horizon SIMPAR SA is expected to under-perform the APA. In addition to that, SIMPAR SA is 2.45 times more volatile than APA Corporation. It trades about -0.36 of its total potential returns per unit of risk. APA Corporation is currently generating about -0.11 per unit of volatility. If you would invest  13,130  in APA Corporation on September 23, 2024 and sell it today you would lose (676.00) from holding APA Corporation or give up 5.15% of portfolio value over 90 days.

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

SIMPAR SA  vs.  APA Corp.

SIMPAR SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIMPAR SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

APA Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APA Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SIMPAR SA and APA

The main advantage of trading using opposite SIMPAR SA and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMPAR SA 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.

The idea behind SIMPAR SA and APA Corporation 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.