Correlation Between CU Tech and APS Holdings

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

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

Diversification Opportunities for CU Tech and APS Holdings

0.19

Correlation Coefficient

CU Tech  APS Holdings

Average diversification

The 3 months correlation between 376290 and APS is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CU Tech Corp and APS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Holdings and CU 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 CU Tech Corp are associated (or correlated) with APS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Holdings has no effect on the direction of CU Tech i.e., CU Tech and APS Holdings go up and down completely randomly.

Pair Corralation between CU Tech and APS Holdings

Assuming the 90 days trading horizon CU Tech Corp is expected to under-perform the APS Holdings. But the stock apears to be less risky and, when comparing its historical volatility, CU Tech Corp is 1.37 times less risky than APS Holdings. The stock trades about -0.08 of its potential returns per unit of risk. The APS Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  583,000  in APS Holdings on September 3, 2024 and sell it today you would lose (13,000) from holding APS Holdings or give up 2.23% of portfolio value over 90 days.

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

CU Tech Corp  vs.  APS Holdings

CU Tech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CU Tech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

APS Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CU Tech and APS Holdings

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

The idea behind CU Tech Corp and APS Holdings 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.