Correlation Between Stem and Apptech Corp
Can any of the company-specific risk be diversified away by investing in both Stem and Apptech Corp 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 Stem and Apptech Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stem Inc and Apptech Corp, you can compare the effects of market volatilities on Stem and Apptech Corp 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 Stem with a short position of Apptech Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stem and Apptech Corp.
Diversification Opportunities for Stem and Apptech Corp
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stem and Apptech is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Stem Inc and Apptech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apptech Corp and Stem 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 Stem Inc are associated (or correlated) with Apptech Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apptech Corp has no effect on the direction of Stem i.e., Stem and Apptech Corp go up and down completely randomly.
Pair Corralation between Stem and Apptech Corp
Given the investment horizon of 90 days Stem Inc is expected to under-perform the Apptech Corp. In addition to that, Stem is 1.24 times more volatile than Apptech Corp. It trades about -0.08 of its total potential returns per unit of risk. Apptech Corp is currently generating about -0.04 per unit of volatility. If you would invest 140.00 in Apptech Corp on September 12, 2024 and sell it today you would lose (94.80) from holding Apptech Corp or give up 67.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stem Inc vs. Apptech Corp
Performance |
| Timeline |
| Stem Inc |
| Apptech Corp |
Stem and Apptech Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stem and Apptech Corp
The main advantage of trading using opposite Stem and Apptech Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stem position performs unexpectedly, Apptech Corp 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 Apptech Corp will offset losses from the drop in Apptech Corp's long position.| Stem vs. Palo Alto Networks | Stem vs. Crowdstrike Holdings | Stem vs. Cloudflare | Stem vs. Palantir Technologies Class |
| Apptech Corp vs. GigaCloud Technology Class | Apptech Corp vs. Alarum Technologies | Apptech Corp vs. Stem Inc | Apptech Corp vs. Pagaya Technologies |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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