Correlation Between GE Aerospace and APAC Resources
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and APAC Resources 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 GE Aerospace and APAC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and APAC Resources Limited, you can compare the effects of market volatilities on GE Aerospace and APAC Resources 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 GE Aerospace with a short position of APAC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and APAC Resources.
Diversification Opportunities for GE Aerospace and APAC Resources
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GE Aerospace and APAC is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and APAC Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APAC Resources and GE Aerospace 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 GE Aerospace are associated (or correlated) with APAC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APAC Resources has no effect on the direction of GE Aerospace i.e., GE Aerospace and APAC Resources go up and down completely randomly.
Pair Corralation between GE Aerospace and APAC Resources
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 4.36 times less return on investment than APAC Resources. But when comparing it to its historical volatility, GE Aerospace is 12.84 times less risky than APAC Resources. It trades about 0.14 of its potential returns per unit of risk. APAC Resources Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15.00 in APAC Resources Limited on September 1, 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 Together |
| Strength | Weak |
| Accuracy | 87.25% |
| Values | Daily Returns |
GE Aerospace vs. APAC Resources Limited
Performance |
| Timeline |
| GE Aerospace |
| APAC Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
GE Aerospace and APAC Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and APAC Resources
The main advantage of trading using opposite GE Aerospace and APAC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, APAC Resources 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 APAC Resources will offset losses from the drop in APAC Resources' long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
| APAC Resources vs. ABS CBN Holdings | APAC Resources vs. Ameritrust Corp | APAC Resources vs. Armada Mercantile | APAC Resources vs. Arcane Crypto AB |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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