Correlation Between APAC Resources and Armada Mercantile
Can any of the company-specific risk be diversified away by investing in both APAC Resources and Armada Mercantile 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 APAC Resources and Armada Mercantile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APAC Resources Limited and Armada Mercantile, you can compare the effects of market volatilities on APAC Resources and Armada Mercantile 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 APAC Resources with a short position of Armada Mercantile. Check out your portfolio center. Please also check ongoing floating volatility patterns of APAC Resources and Armada Mercantile.
Diversification Opportunities for APAC Resources and Armada Mercantile
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between APAC and Armada is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding APAC Resources Limited and Armada Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Mercantile and APAC Resources 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 APAC Resources Limited are associated (or correlated) with Armada Mercantile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Mercantile has no effect on the direction of APAC Resources i.e., APAC Resources and Armada Mercantile go up and down completely randomly.
Pair Corralation between APAC Resources and Armada Mercantile
Assuming the 90 days horizon APAC Resources Limited is expected to generate 3.1 times more return on investment than Armada Mercantile. However, APAC Resources is 3.1 times more volatile than Armada Mercantile. It trades about 0.05 of its potential returns per unit of risk. Armada Mercantile is currently generating about 0.03 per unit of risk. If you would invest 15.00 in APAC Resources Limited on October 21, 2024 and sell it today you would lose (4.00) from holding APAC Resources Limited or give up 26.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.33% |
| Values | Daily Returns |
APAC Resources Limited vs. Armada Mercantile
Performance |
| Timeline |
| APAC Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Armada Mercantile |
APAC Resources and Armada Mercantile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APAC Resources and Armada Mercantile
The main advantage of trading using opposite APAC Resources and Armada Mercantile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APAC Resources position performs unexpectedly, Armada Mercantile 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 Armada Mercantile will offset losses from the drop in Armada Mercantile's long position.| APAC Resources vs. ABS CBN Holdings | APAC Resources vs. Ameritrust Corp | APAC Resources vs. Armada Mercantile | APAC Resources vs. Arcane Crypto AB |
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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 Stocks Directory module to find actively traded stocks across global markets.
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