Correlation Between Toya SA and APS Energia

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

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

Diversification Opportunities for Toya SA and APS Energia

0.01

Correlation Coefficient

Toya SA  APS Energia

Significant diversification

The 3 months correlation between Toya and APS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Toya SA and APS Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Energia SA and Toya 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 Toya SA are associated (or correlated) with APS Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Energia SA has no effect on the direction of Toya SA i.e., Toya SA and APS Energia go up and down completely randomly.

Pair Corralation between Toya SA and APS Energia

Assuming the 90 days trading horizon Toya SA is expected to under-perform the APS Energia. But the stock apears to be less risky and, when comparing its historical volatility, Toya SA is 2.8 times less risky than APS Energia. The stock trades about 0.0 of its potential returns per unit of risk. The APS Energia SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  266.00  in APS Energia SA on November 29, 2024 and sell it today you would earn a total of  63.00  from holding APS Energia SA or generate 23.68% return on investment over 90 days.

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

Toya SA  vs.  APS Energia SA

Toya SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toya SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Toya SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

APS Energia SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in APS Energia SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, APS Energia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toya SA and APS Energia

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

The idea behind Toya SA and APS Energia SA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.