Correlation Between Apollo Investment and China Communications
Can any of the company-specific risk be diversified away by investing in both Apollo Investment and China Communications 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 Investment and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Investment Corp and China Communications Services, you can compare the effects of market volatilities on Apollo Investment and China Communications 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 Investment with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Investment and China Communications.
Diversification Opportunities for Apollo Investment and China Communications
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Apollo and China is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and Apollo Investment 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 Investment Corp are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of Apollo Investment i.e., Apollo Investment and China Communications go up and down completely randomly.
Pair Corralation between Apollo Investment and China Communications
Assuming the 90 days trading horizon Apollo Investment Corp is expected to generate 0.8 times more return on investment than China Communications. However, Apollo Investment Corp is 1.25 times less risky than China Communications. It trades about -0.07 of its potential returns per unit of risk. China Communications Services is currently generating about -0.07 per unit of risk. If you would invest 1,301 in Apollo Investment Corp on October 16, 2024 and sell it today you would lose (20.00) from holding Apollo Investment Corp or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apollo Investment Corp vs. China Communications Services
Performance |
| Timeline |
| Apollo Investment Corp |
| China Communications |
Apollo Investment and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Investment and China Communications
The main advantage of trading using opposite Apollo Investment and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Investment position performs unexpectedly, China Communications 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 China Communications will offset losses from the drop in China Communications' long position.| Apollo Investment vs. EMBARK EDUCATION LTD | Apollo Investment vs. Applied Materials | Apollo Investment vs. Materialise NV | Apollo Investment vs. Vulcan Materials |
| China Communications vs. Scottish Mortgage Investment | China Communications vs. HK Electric Investments | China Communications vs. American Eagle Outfitters | China Communications vs. Apollo Investment Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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