Correlation Between S Tech and APEX International

Can any of the company-specific risk be diversified away by investing in both S Tech and APEX International 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 S Tech and APEX International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between S Tech Corp and APEX International Financial, you can compare the effects of market volatilities on S Tech and APEX International 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 S Tech with a short position of APEX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of S Tech and APEX International.

Diversification Opportunities for S Tech and APEX International

-0.46

Correlation Coefficient

S Tech  APEX International

Very good diversification

The 3 months correlation between 1584 and APEX is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding S Tech Corp and APEX International Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APEX International and S Tech 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 S Tech Corp are associated (or correlated) with APEX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APEX International has no effect on the direction of S Tech i.e., S Tech and APEX International go up and down completely randomly.

Pair Corralation between S Tech and APEX International

Assuming the 90 days trading horizon S Tech Corp is expected to under-perform the APEX International. But the stock apears to be less risky and, when comparing its historical volatility, S Tech Corp is 1.82 times less risky than APEX International. The stock trades about -0.16 of its potential returns per unit of risk. The APEX International Financial is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,420  in APEX International Financial on September 2, 2024 and sell it today you would earn a total of  570.00  from holding APEX International Financial or generate 23.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

S Tech Corp  vs.  APEX International Financial

S Tech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days S Tech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

APEX International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in APEX International Financial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, APEX International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with S Tech and APEX International

The main advantage of trading using opposite S Tech and APEX International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S Tech position performs unexpectedly, APEX International 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 APEX International will offset losses from the drop in APEX International's long position.

The idea behind S Tech Corp and APEX International Financial 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.