Correlation Between UGI and APA
Can any of the company-specific risk be diversified away by investing in both UGI and APA 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 UGI and APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UGI Corporation and APA Group, you can compare the effects of market volatilities on UGI and APA 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 UGI with a short position of APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of UGI and APA.
Diversification Opportunities for UGI and APA
Very good diversification
The 3 months correlation between UGI and APA is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding UGI Corp. and APA Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Group and UGI 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 UGI Corporation are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Group has no effect on the direction of UGI i.e., UGI and APA go up and down completely randomly.
Pair Corralation between UGI and APA
Considering the 90-day investment horizon UGI is expected to generate 2.63 times less return on investment than APA. But when comparing it to its historical volatility, UGI Corporation is 2.68 times less risky than APA. It trades about 0.01 of its potential returns per unit of risk. APA Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 587.00 in APA Group on November 1, 2024 and sell it today you would lose (210.00) from holding APA Group or give up 35.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.67% |
| Values | Daily Returns |
UGI Corp. vs. APA Group
Performance |
| Timeline |
| UGI Corporation |
| APA Group |
UGI and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UGI and APA
The main advantage of trading using opposite UGI and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UGI position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.The idea behind UGI Corporation and APA Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |