Correlation Between Apollo Medical and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both Apollo Medical and Dairy Farm 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 Apollo Medical and Dairy Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Medical Holdings and Dairy Farm International, you can compare the effects of market volatilities on Apollo Medical and Dairy Farm 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 Apollo Medical with a short position of Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Medical and Dairy Farm.
Diversification Opportunities for Apollo Medical and Dairy Farm
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apollo and Dairy is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Medical Holdings and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International and Apollo Medical 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 Apollo Medical Holdings are associated (or correlated) with Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Apollo Medical i.e., Apollo Medical and Dairy Farm go up and down completely randomly.
Pair Corralation between Apollo Medical and Dairy Farm
Assuming the 90 days horizon Apollo Medical is expected to generate 14.12 times less return on investment than Dairy Farm. But when comparing it to its historical volatility, Apollo Medical Holdings is 1.84 times less risky than Dairy Farm. It trades about 0.01 of its potential returns per unit of risk. Dairy Farm International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 168.00 in Dairy Farm International on September 1, 2024 and sell it today you would earn a total of 62.00 from holding Dairy Farm International or generate 36.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apollo Medical Holdings vs. Dairy Farm International
Performance |
| Timeline |
| Apollo Medical Holdings |
| Dairy Farm International |
Apollo Medical and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Medical and Dairy Farm
The main advantage of trading using opposite Apollo Medical and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Medical position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| Apollo Medical vs. WillScot Mobile Mini | Apollo Medical vs. Iridium Communications | Apollo Medical vs. Rogers Communications | Apollo Medical vs. Zijin Mining Group |
| Dairy Farm vs. TESCO PLC LS 0633333 | Dairy Farm vs. Superior Plus Corp | Dairy Farm vs. NMI Holdings | Dairy Farm vs. Origin Agritech |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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