Correlation Between ON SEMICONDUCTOR and Apollo Investment

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

By analyzing existing cross correlation between ON SEMICONDUCTOR and Apollo Investment Corp, you can compare the effects of market volatilities on ON SEMICONDUCTOR and Apollo Investment 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 ON SEMICONDUCTOR with a short position of Apollo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ON SEMICONDUCTOR and Apollo Investment.

Diversification Opportunities for ON SEMICONDUCTOR and Apollo Investment

0.25

Correlation Coefficient

ON SEMICONDUCTOR  Apollo Investment

Modest diversification

The 3 months correlation between XS4 and Apollo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding ON SEMICONDUCTOR and Apollo Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Investment Corp and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR are associated (or correlated) with Apollo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Investment Corp has no effect on the direction of ON SEMICONDUCTOR i.e., ON SEMICONDUCTOR and Apollo Investment go up and down completely randomly.

Pair Corralation between ON SEMICONDUCTOR and Apollo Investment

Assuming the 90 days trading horizon ON SEMICONDUCTOR is expected to under-perform the Apollo Investment. In addition to that, ON SEMICONDUCTOR is 2.86 times more volatile than Apollo Investment Corp. It trades about -0.06 of its total potential returns per unit of risk. Apollo Investment Corp is currently generating about 0.36 per unit of volatility. If you would invest  1,217  in Apollo Investment Corp on September 12, 2024 and sell it today you would earn a total of  86.00  from holding Apollo Investment Corp or generate 7.07% return on investment over 90 days.

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

ON SEMICONDUCTOR  vs.  Apollo Investment Corp

ON SEMICONDUCTOR

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ON SEMICONDUCTOR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ON SEMICONDUCTOR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Apollo Investment Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Investment Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Apollo Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ON SEMICONDUCTOR and Apollo Investment

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

The idea behind ON SEMICONDUCTOR and Apollo Investment Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.