Correlation Between 3M and APT Systems
Can any of the company-specific risk be diversified away by investing in both 3M and APT Systems 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 3M and APT Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3M Company and APT Systems, you can compare the effects of market volatilities on 3M and APT Systems 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 3M with a short position of APT Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and APT Systems.
Diversification Opportunities for 3M and APT Systems
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 3M and APT is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and APT Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APT Systems and 3M 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 3M Company are associated (or correlated) with APT Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APT Systems has no effect on the direction of 3M i.e., 3M and APT Systems go up and down completely randomly.
Pair Corralation between 3M and APT Systems
Considering the 90-day investment horizon 3M is expected to generate 8.72 times less return on investment than APT Systems. But when comparing it to its historical volatility, 3M Company is 7.42 times less risky than APT Systems. It trades about 0.04 of its potential returns per unit of risk. APT Systems is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.12 in APT Systems on August 31, 2024 and sell it today you would lose (0.08) from holding APT Systems or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
3M Company vs. APT Systems
Performance |
| Timeline |
| 3M Company |
| APT Systems |
3M and APT Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3M and APT Systems
The main advantage of trading using opposite 3M and APT Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, APT Systems 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 Systems will offset losses from the drop in APT Systems' long position.| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
| APT Systems vs. Protek Capital | APT Systems vs. On4 Communications | APT Systems vs. Bowmo Inc | APT Systems vs. BHPA Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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