Correlation Between Caterpillar and APT Satellite
Can any of the company-specific risk be diversified away by investing in both Caterpillar and APT Satellite 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 Caterpillar and APT Satellite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caterpillar and APT Satellite Holdings, you can compare the effects of market volatilities on Caterpillar and APT Satellite 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 Caterpillar with a short position of APT Satellite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caterpillar and APT Satellite.
Diversification Opportunities for Caterpillar and APT Satellite
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caterpillar and APT is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Caterpillar and APT Satellite Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APT Satellite Holdings and Caterpillar 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 Caterpillar are associated (or correlated) with APT Satellite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APT Satellite Holdings has no effect on the direction of Caterpillar i.e., Caterpillar and APT Satellite go up and down completely randomly.
Pair Corralation between Caterpillar and APT Satellite
If you would invest 32,643 in Caterpillar on September 5, 2024 and sell it today you would earn a total of 7,283 from holding Caterpillar or generate 22.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 42.4% |
| Values | Daily Returns |
Caterpillar vs. APT Satellite Holdings
Performance |
| Timeline |
| Caterpillar |
| APT Satellite Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caterpillar and APT Satellite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caterpillar and APT Satellite
The main advantage of trading using opposite Caterpillar and APT Satellite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caterpillar position performs unexpectedly, APT Satellite 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 APT Satellite will offset losses from the drop in APT Satellite's long position.| Caterpillar vs. AGCO Corporation | Caterpillar vs. Deere Company | Caterpillar vs. Lindsay | Caterpillar vs. Lion Electric Corp |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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