Correlation Between Aptos and JAR
Can any of the company-specific risk be diversified away by investing in both Aptos and JAR 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 Aptos and JAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptos and JAR, you can compare the effects of market volatilities on Aptos and JAR 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 Aptos with a short position of JAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptos and JAR.
Diversification Opportunities for Aptos and JAR
Very poor diversification
The 3 months correlation between Aptos and JAR is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aptos and JAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAR and Aptos 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 Aptos are associated (or correlated) with JAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAR has no effect on the direction of Aptos i.e., Aptos and JAR go up and down completely randomly.
Pair Corralation between Aptos and JAR
Assuming the 90 days trading horizon Aptos is expected to generate 1.19 times more return on investment than JAR. However, Aptos is 1.19 times more volatile than JAR. It trades about 0.22 of its potential returns per unit of risk. JAR is currently generating about 0.16 per unit of risk. If you would invest 980.00 in Aptos on August 30, 2024 and sell it today you would earn a total of 292.00 from holding Aptos or generate 29.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptos vs. JAR
Performance |
| Timeline |
| Aptos |
| JAR |
Aptos and JAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptos and JAR
The main advantage of trading using opposite Aptos and JAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptos position performs unexpectedly, JAR 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 JAR will offset losses from the drop in JAR's long position.The idea behind Aptos and JAR 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.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |