Correlation Between Apollo Medical and KAR Auction
Can any of the company-specific risk be diversified away by investing in both Apollo Medical and KAR Auction 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 KAR Auction 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 KAR Auction Services, you can compare the effects of market volatilities on Apollo Medical and KAR Auction 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 KAR Auction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Medical and KAR Auction.
Diversification Opportunities for Apollo Medical and KAR Auction
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Apollo and KAR is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Medical Holdings and KAR Auction Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAR Auction Services 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 KAR Auction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAR Auction Services has no effect on the direction of Apollo Medical i.e., Apollo Medical and KAR Auction go up and down completely randomly.
Pair Corralation between Apollo Medical and KAR Auction
Assuming the 90 days horizon Apollo Medical Holdings is expected to under-perform the KAR Auction. But the stock apears to be less risky and, when comparing its historical volatility, Apollo Medical Holdings is 1.36 times less risky than KAR Auction. The stock trades about -0.05 of its potential returns per unit of risk. The KAR Auction Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,940 in KAR Auction Services on November 28, 2024 and sell it today you would earn a total of 30.00 from holding KAR Auction Services or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apollo Medical Holdings vs. KAR Auction Services
Performance |
| Timeline |
| Apollo Medical Holdings |
| KAR Auction Services |
Apollo Medical and KAR Auction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Medical and KAR Auction
The main advantage of trading using opposite Apollo Medical and KAR Auction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Medical position performs unexpectedly, KAR Auction 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 KAR Auction will offset losses from the drop in KAR Auction's long position.| Apollo Medical vs. HK Electric Investments | Apollo Medical vs. Cogent Communications Holdings | Apollo Medical vs. CHRYSALIS INVESTMENTS LTD | Apollo Medical vs. Investment AB Latour |
| KAR Auction vs. ALERION CLEANPOWER | KAR Auction vs. ELMOS SEMICONDUCTOR | KAR Auction vs. NXP Semiconductors NV | KAR Auction vs. REVO INSURANCE SPA |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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