Correlation Between Aptos and Orca
Can any of the company-specific risk be diversified away by investing in both Aptos and Orca 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 Orca into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptos and Orca, you can compare the effects of market volatilities on Aptos and Orca 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 Orca. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptos and Orca.
Diversification Opportunities for Aptos and Orca
Very poor diversification
The 3 months correlation between Aptos and Orca is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Aptos and Orca in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orca 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 Orca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orca has no effect on the direction of Aptos i.e., Aptos and Orca go up and down completely randomly.
Pair Corralation between Aptos and Orca
Assuming the 90 days trading horizon Aptos is expected to generate 1.07 times less return on investment than Orca. But when comparing it to its historical volatility, Aptos is 1.45 times less risky than Orca. It trades about 0.21 of its potential returns per unit of risk. Orca is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 282.00 in Orca on August 27, 2024 and sell it today you would earn a total of 70.00 from holding Orca or generate 24.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptos vs. Orca
Performance |
| Timeline |
| Aptos |
| Orca |
Aptos and Orca Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptos and Orca
The main advantage of trading using opposite Aptos and Orca positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptos position performs unexpectedly, Orca 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 Orca will offset losses from the drop in Orca's long position.The idea behind Aptos and Orca 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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