Correlation Between Apex Biotechnology and Standard Chemical
Can any of the company-specific risk be diversified away by investing in both Apex Biotechnology and Standard Chemical 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 Apex Biotechnology and Standard Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apex Biotechnology Corp and Standard Chemical Pharmaceutical, you can compare the effects of market volatilities on Apex Biotechnology and Standard Chemical 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 Apex Biotechnology with a short position of Standard Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apex Biotechnology and Standard Chemical.
Diversification Opportunities for Apex Biotechnology and Standard Chemical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apex and Standard is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Apex Biotechnology Corp and Standard Chemical Pharmaceutic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Chemical and Apex Biotechnology 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 Apex Biotechnology Corp are associated (or correlated) with Standard Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Chemical has no effect on the direction of Apex Biotechnology i.e., Apex Biotechnology and Standard Chemical go up and down completely randomly.
Pair Corralation between Apex Biotechnology and Standard Chemical
Assuming the 90 days trading horizon Apex Biotechnology Corp is expected to under-perform the Standard Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Apex Biotechnology Corp is 1.58 times less risky than Standard Chemical. The stock trades about -0.08 of its potential returns per unit of risk. The Standard Chemical Pharmaceutical is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6,450 in Standard Chemical Pharmaceutical on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Standard Chemical Pharmaceutical or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apex Biotechnology Corp vs. Standard Chemical Pharmaceutic
Performance |
| Timeline |
| Apex Biotechnology Corp |
| Standard Chemical |
Apex Biotechnology and Standard Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apex Biotechnology and Standard Chemical
The main advantage of trading using opposite Apex Biotechnology and Standard Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apex Biotechnology position performs unexpectedly, Standard Chemical 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 Standard Chemical will offset losses from the drop in Standard Chemical's long position.| Apex Biotechnology vs. Grape King Bio | Apex Biotechnology vs. Standard Chemical Pharmaceutical | Apex Biotechnology vs. China Steel Chemical | Apex Biotechnology vs. Sinphar Pharmaceutical Co |
| Standard Chemical vs. Sinphar Pharmaceutical Co | Standard Chemical vs. Grape King Bio | Standard Chemical vs. Apex Biotechnology Corp | Standard Chemical vs. Leatec Fine Ceramics |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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