Correlation Between San Juan and APA

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

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

Diversification Opportunities for San Juan and APA

-0.17

Correlation Coefficient

San Juan  APA

Good diversification

The 3 months correlation between San and APA is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding San Juan Basin and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation and San Juan 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 San Juan Basin 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 San Juan i.e., San Juan and APA go up and down completely randomly.

Pair Corralation between San Juan and APA

Considering the 90-day investment horizon San Juan Basin is expected to under-perform the APA. In addition to that, San Juan is 1.22 times more volatile than APA Corporation. It trades about -0.33 of its total potential returns per unit of risk. APA Corporation is currently generating about -0.06 per unit of volatility. If you would invest  2,252  in APA Corporation on September 28, 2024 and sell it today you would lose (68.00) from holding APA Corporation or give up 3.02% of portfolio value over 90 days.

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

San Juan Basin  vs.  APA Corp.

San Juan Basin

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in San Juan Basin are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking indicators, San Juan is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the 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 latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with San Juan and APA

The main advantage of trading using opposite San Juan and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Juan 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 San Juan Basin 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.