Correlation Between Technology Ultrasector and Apexcm Small/mid

Can any of the company-specific risk be diversified away by investing in both Technology Ultrasector and Apexcm Small/mid 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 Technology Ultrasector and Apexcm Small/mid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Technology Ultrasector Profund and Apexcm Smallmid Cap, you can compare the effects of market volatilities on Technology Ultrasector and Apexcm Small/mid 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 Technology Ultrasector with a short position of Apexcm Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Ultrasector and Apexcm Small/mid.

Diversification Opportunities for Technology Ultrasector and Apexcm Small/mid

0.78

Correlation Coefficient

Technology Ultrasector  Apexcm Small/mid

Poor diversification

The 3 months correlation between Technology and Apexcm is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Technology Ultrasector Profund and Apexcm Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apexcm Smallmid Cap and Technology Ultrasector 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 Technology Ultrasector Profund are associated (or correlated) with Apexcm Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apexcm Smallmid Cap has no effect on the direction of Technology Ultrasector i.e., Technology Ultrasector and Apexcm Small/mid go up and down completely randomly.

Pair Corralation between Technology Ultrasector and Apexcm Small/mid

Assuming the 90 days horizon Technology Ultrasector Profund is expected to under-perform the Apexcm Small/mid. In addition to that, Technology Ultrasector is 2.15 times more volatile than Apexcm Smallmid Cap. It trades about -0.15 of its total potential returns per unit of risk. Apexcm Smallmid Cap is currently generating about -0.13 per unit of volatility. If you would invest  1,745  in Apexcm Smallmid Cap on December 24, 2024 and sell it today you would lose (175.00) from holding Apexcm Smallmid Cap or give up 10.03% of portfolio value over 90 days.

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

Technology Ultrasector Profund  vs.  Apexcm Smallmid Cap

Technology Ultrasector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Technology Ultrasector Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Apexcm Smallmid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apexcm Smallmid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Technology Ultrasector and Apexcm Small/mid

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

The idea behind Technology Ultrasector Profund and Apexcm Smallmid Cap 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.