Correlation Between APS Energia and HiProMine

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Can any of the company-specific risk be diversified away by investing in both APS Energia and HiProMine 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 APS Energia and HiProMine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APS Energia SA and HiProMine SA, you can compare the effects of market volatilities on APS Energia and HiProMine 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 APS Energia with a short position of HiProMine. Check out your portfolio center. Please also check ongoing floating volatility patterns of APS Energia and HiProMine.

Diversification Opportunities for APS Energia and HiProMine

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between APS and HiProMine is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding APS Energia SA and HiProMine SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HiProMine SA and APS Energia 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 APS Energia SA are associated (or correlated) with HiProMine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HiProMine SA has no effect on the direction of APS Energia i.e., APS Energia and HiProMine go up and down completely randomly.

Pair Corralation between APS Energia and HiProMine

Assuming the 90 days trading horizon APS Energia SA is expected to generate 1.85 times more return on investment than HiProMine. However, APS Energia is 1.85 times more volatile than HiProMine SA. It trades about -0.03 of its potential returns per unit of risk. HiProMine SA is currently generating about -0.08 per unit of risk. If you would invest  297.00  in APS Energia SA on August 31, 2024 and sell it today you would lose (27.00) from holding APS Energia SA or give up 9.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.16%
ValuesDaily Returns

APS Energia SA  vs.  HiProMine SA

 Performance 
       Timeline  
APS Energia SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days APS Energia SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
HiProMine SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HiProMine SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

APS Energia and HiProMine Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with APS Energia and HiProMine

The main advantage of trading using opposite APS Energia and HiProMine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APS Energia position performs unexpectedly, HiProMine 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 HiProMine will offset losses from the drop in HiProMine's long position.
The idea behind APS Energia SA and HiProMine SA 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.
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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