Correlation Between Aprogen Healthcare and Lake Materials
Can any of the company-specific risk be diversified away by investing in both Aprogen Healthcare and Lake Materials 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 Aprogen Healthcare and Lake Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aprogen Healthcare Games and Lake Materials Co, you can compare the effects of market volatilities on Aprogen Healthcare and Lake Materials 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 Aprogen Healthcare with a short position of Lake Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aprogen Healthcare and Lake Materials.
Diversification Opportunities for Aprogen Healthcare and Lake Materials
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aprogen and Lake is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aprogen Healthcare Games and Lake Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Materials and Aprogen Healthcare 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 Aprogen Healthcare Games are associated (or correlated) with Lake Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lake Materials has no effect on the direction of Aprogen Healthcare i.e., Aprogen Healthcare and Lake Materials go up and down completely randomly.
Pair Corralation between Aprogen Healthcare and Lake Materials
Assuming the 90 days trading horizon Aprogen Healthcare Games is expected to generate 1.4 times more return on investment than Lake Materials. However, Aprogen Healthcare is 1.4 times more volatile than Lake Materials Co. It trades about -0.18 of its potential returns per unit of risk. Lake Materials Co is currently generating about -0.41 per unit of risk. If you would invest 55,400 in Aprogen Healthcare Games on September 3, 2024 and sell it today you would lose (9,600) from holding Aprogen Healthcare Games or give up 17.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aprogen Healthcare Games vs. Lake Materials Co
Performance |
| Timeline |
| Aprogen Healthcare Games |
| Lake Materials |
Aprogen Healthcare and Lake Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aprogen Healthcare and Lake Materials
The main advantage of trading using opposite Aprogen Healthcare and Lake Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aprogen Healthcare position performs unexpectedly, Lake Materials 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 Lake Materials will offset losses from the drop in Lake Materials' long position.| Aprogen Healthcare vs. Display Tech Co | Aprogen Healthcare vs. Sam Yang Foods | Aprogen Healthcare vs. Organic Special Pet | Aprogen Healthcare vs. FoodNamoo |
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Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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