Correlation Between Apollo Food and Kawan Food
Can any of the company-specific risk be diversified away by investing in both Apollo Food and Kawan Food 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 Food and Kawan Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Food Holdings and Kawan Food Bhd, you can compare the effects of market volatilities on Apollo Food and Kawan Food 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 Food with a short position of Kawan Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Food and Kawan Food.
Diversification Opportunities for Apollo Food and Kawan Food
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apollo and Kawan is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Food Holdings and Kawan Food Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kawan Food Bhd and Apollo Food 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 Food Holdings are associated (or correlated) with Kawan Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kawan Food Bhd has no effect on the direction of Apollo Food i.e., Apollo Food and Kawan Food go up and down completely randomly.
Pair Corralation between Apollo Food and Kawan Food
Assuming the 90 days trading horizon Apollo Food Holdings is expected to generate 1.4 times more return on investment than Kawan Food. However, Apollo Food is 1.4 times more volatile than Kawan Food Bhd. It trades about 0.08 of its potential returns per unit of risk. Kawan Food Bhd is currently generating about -0.03 per unit of risk. If you would invest 338.00 in Apollo Food Holdings on August 26, 2024 and sell it today you would earn a total of 312.00 from holding Apollo Food Holdings or generate 92.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apollo Food Holdings vs. Kawan Food Bhd
Performance |
| Timeline |
| Apollo Food Holdings |
| Kawan Food Bhd |
Apollo Food and Kawan Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Food and Kawan Food
The main advantage of trading using opposite Apollo Food and Kawan Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Food position performs unexpectedly, Kawan Food 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 Kawan Food will offset losses from the drop in Kawan Food's long position.The idea behind Apollo Food Holdings and Kawan Food Bhd 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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