Correlation Between Apollo Bancorp and Bayfirst Financial

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

Diversification Opportunities for Apollo Bancorp and Bayfirst Financial

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Apollo and Bayfirst is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Bancorp and Bayfirst Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayfirst Financial Corp and Apollo Bancorp 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 Bancorp are associated (or correlated) with Bayfirst Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayfirst Financial Corp has no effect on the direction of Apollo Bancorp i.e., Apollo Bancorp and Bayfirst Financial go up and down completely randomly.

Pair Corralation between Apollo Bancorp and Bayfirst Financial

Given the investment horizon of 90 days Apollo Bancorp is expected to generate 0.16 times more return on investment than Bayfirst Financial. However, Apollo Bancorp is 6.15 times less risky than Bayfirst Financial. It trades about 0.24 of its potential returns per unit of risk. Bayfirst Financial Corp is currently generating about -0.07 per unit of risk. If you would invest  3,647  in Apollo Bancorp on September 3, 2024 and sell it today you would earn a total of  53.00  from holding Apollo Bancorp or generate 1.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Apollo Bancorp  vs.  Bayfirst Financial Corp

 Performance 
       Timeline  
Apollo Bancorp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Apollo Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Apollo Bancorp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Bayfirst Financial Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bayfirst Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Bayfirst Financial is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Apollo Bancorp and Bayfirst Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apollo Bancorp and Bayfirst Financial

The main advantage of trading using opposite Apollo Bancorp and Bayfirst Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Bancorp position performs unexpectedly, Bayfirst Financial 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 Bayfirst Financial will offset losses from the drop in Bayfirst Financial's long position.
The idea behind Apollo Bancorp and Bayfirst Financial Corp 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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