Correlation Between AP Public and ALL ENERGY
Can any of the company-specific risk be diversified away by investing in both AP Public and ALL ENERGY 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 AP Public and ALL ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Public and ALL ENERGY UTILITIES, you can compare the effects of market volatilities on AP Public and ALL ENERGY 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 AP Public with a short position of ALL ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Public and ALL ENERGY.
Diversification Opportunities for AP Public and ALL ENERGY
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AP Public and ALL is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding AP Public and ALL ENERGY UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALL ENERGY UTILITIES and AP Public 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 AP Public are associated (or correlated) with ALL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALL ENERGY UTILITIES has no effect on the direction of AP Public i.e., AP Public and ALL ENERGY go up and down completely randomly.
Pair Corralation between AP Public and ALL ENERGY
Assuming the 90 days horizon AP Public is expected to generate 0.42 times more return on investment than ALL ENERGY. However, AP Public is 2.38 times less risky than ALL ENERGY. It trades about -0.01 of its potential returns per unit of risk. ALL ENERGY UTILITIES is currently generating about -0.04 per unit of risk. If you would invest 967.00 in AP Public on September 2, 2024 and sell it today you would lose (102.00) from holding AP Public or give up 10.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
AP Public vs. ALL ENERGY UTILITIES
Performance |
| Timeline |
| AP Public |
| ALL ENERGY UTILITIES |
AP Public and ALL ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Public and ALL ENERGY
The main advantage of trading using opposite AP Public and ALL ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Public position performs unexpectedly, ALL ENERGY 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 ALL ENERGY will offset losses from the drop in ALL ENERGY's long position.The idea behind AP Public and ALL ENERGY UTILITIES 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.| ALL ENERGY vs. AP Public | ALL ENERGY vs. TRC Construction Public | ALL ENERGY vs. Bangkok Expressway and | ALL ENERGY vs. Lohakit Metal Public |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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