Correlation Between Api Group and Energy Services
Can any of the company-specific risk be diversified away by investing in both Api Group and Energy Services 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 Api Group and Energy Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Api Group Corp and Energy Services, you can compare the effects of market volatilities on Api Group and Energy Services 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 Api Group with a short position of Energy Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Api Group and Energy Services.
Diversification Opportunities for Api Group and Energy Services
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Api and Energy is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Api Group Corp and Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Services and Api Group 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 Api Group Corp are associated (or correlated) with Energy Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Services has no effect on the direction of Api Group i.e., Api Group and Energy Services go up and down completely randomly.
Pair Corralation between Api Group and Energy Services
Considering the 90-day investment horizon Api Group is expected to generate 3.07 times less return on investment than Energy Services. But when comparing it to its historical volatility, Api Group Corp is 2.73 times less risky than Energy Services. It trades about 0.09 of its potential returns per unit of risk. Energy Services is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 258.00 in Energy Services on August 28, 2024 and sell it today you would earn a total of 1,355 from holding Energy Services or generate 525.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Api Group Corp vs. Energy Services
Performance |
| Timeline |
| Api Group Corp |
| Energy Services |
Api Group and Energy Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Api Group and Energy Services
The main advantage of trading using opposite Api Group and Energy Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Api Group position performs unexpectedly, Energy Services 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 Energy Services will offset losses from the drop in Energy Services' long position.The idea behind Api Group Corp and Energy Services 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.| Energy Services vs. Bouygues SA | Energy Services vs. NV5 Global | Energy Services vs. Matrix Service Co | Energy Services vs. MYR Group |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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