Correlation Between APEX International and Interactive Digital
Can any of the company-specific risk be diversified away by investing in both APEX International and Interactive Digital 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 International and Interactive Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APEX International Financial and Interactive Digital Technologies, you can compare the effects of market volatilities on APEX International and Interactive Digital 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 International with a short position of Interactive Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of APEX International and Interactive Digital.
Diversification Opportunities for APEX International and Interactive Digital
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between APEX and Interactive is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding APEX International Financial and Interactive Digital Technologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Digital and APEX International 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 International Financial are associated (or correlated) with Interactive Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Digital has no effect on the direction of APEX International i.e., APEX International and Interactive Digital go up and down completely randomly.
Pair Corralation between APEX International and Interactive Digital
Assuming the 90 days trading horizon APEX International Financial is expected to under-perform the Interactive Digital. In addition to that, APEX International is 3.85 times more volatile than Interactive Digital Technologies. It trades about -0.22 of its total potential returns per unit of risk. Interactive Digital Technologies is currently generating about 0.05 per unit of volatility. If you would invest 8,260 in Interactive Digital Technologies on November 4, 2024 and sell it today you would earn a total of 70.00 from holding Interactive Digital Technologies or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APEX International Financial vs. Interactive Digital Technologi
Performance |
| Timeline |
| APEX International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Interactive Digital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
APEX International and Interactive Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APEX International and Interactive Digital
The main advantage of trading using opposite APEX International and Interactive Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APEX International position performs unexpectedly, Interactive Digital 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 Interactive Digital will offset losses from the drop in Interactive Digital's long position.The idea behind APEX International Financial and Interactive Digital Technologies 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.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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