Correlation Between AptaBio Therapeutics and GS Engineering

Can any of the company-specific risk be diversified away by investing in both AptaBio Therapeutics and GS Engineering 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 AptaBio Therapeutics and GS Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AptaBio Therapeutics and GS Engineering Construction, you can compare the effects of market volatilities on AptaBio Therapeutics and GS Engineering 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 AptaBio Therapeutics with a short position of GS Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of AptaBio Therapeutics and GS Engineering.

Diversification Opportunities for AptaBio Therapeutics and GS Engineering

0.41

Correlation Coefficient

AptaBio Therapeutics  GS Engineering

Very weak diversification

The 3 months correlation between AptaBio and 006360 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding AptaBio Therapeutics and GS Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GS Engineering Const and AptaBio Therapeutics 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 AptaBio Therapeutics are associated (or correlated) with GS Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GS Engineering Const has no effect on the direction of AptaBio Therapeutics i.e., AptaBio Therapeutics and GS Engineering go up and down completely randomly.

Pair Corralation between AptaBio Therapeutics and GS Engineering

Assuming the 90 days trading horizon AptaBio Therapeutics is expected to under-perform the GS Engineering. In addition to that, AptaBio Therapeutics is 1.77 times more volatile than GS Engineering Construction. It trades about -0.17 of its total potential returns per unit of risk. GS Engineering Construction is currently generating about -0.02 per unit of volatility. If you would invest  2,040,000  in GS Engineering Construction on September 1, 2024 and sell it today you would lose (92,000) from holding GS Engineering Construction or give up 4.51% of portfolio value over 90 days.

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

AptaBio Therapeutics  vs.  GS Engineering Construction

AptaBio Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AptaBio Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

GS Engineering Const

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GS Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GS Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AptaBio Therapeutics and GS Engineering

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

The idea behind AptaBio Therapeutics and GS Engineering Construction 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.