Correlation Between Home Depot and APAC Resources
Can any of the company-specific risk be diversified away by investing in both Home Depot 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 Home Depot and APAC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and APAC Resources Limited, you can compare the effects of market volatilities on Home Depot 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 Home Depot with a short position of APAC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and APAC Resources.
Diversification Opportunities for Home Depot and APAC Resources
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and APAC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and APAC Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APAC Resources and Home Depot 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 Home Depot 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 Home Depot i.e., Home Depot and APAC Resources go up and down completely randomly.
Pair Corralation between Home Depot and APAC Resources
If you would invest 39,169 in Home Depot on September 1, 2024 and sell it today you would earn a total of 3,744 from holding Home Depot or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 71.43% |
| Values | Daily Returns |
Home Depot vs. APAC Resources Limited
Performance |
| Timeline |
| Home Depot |
| APAC Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Home Depot and APAC Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and APAC Resources
The main advantage of trading using opposite Home Depot and APAC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot 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.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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