Correlation Between Apollo Medical and Traton SE

Can any of the company-specific risk be diversified away by investing in both Apollo Medical and Traton SE 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 Apollo Medical and Traton SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Apollo Medical and Traton SE

-0.2

Correlation Coefficient

Apollo Medical  Traton SE

Good diversification

The 3 months correlation between Apollo and Traton is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Medical Holdings and Traton SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traton SE and Apollo Medical 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 Apollo Medical Holdings are associated (or correlated) with Traton SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Traton SE has no effect on the direction of Apollo Medical i.e., Apollo Medical and Traton SE go up and down completely randomly.

Pair Corralation between Apollo Medical and Traton SE

Assuming the 90 days horizon Apollo Medical is expected to generate 5.39 times less return on investment than Traton SE. But when comparing it to its historical volatility, Apollo Medical Holdings is 1.22 times less risky than Traton SE. It trades about 0.02 of its potential returns per unit of risk. Traton SE is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,830  in Traton SE on September 15, 2024 and sell it today you would earn a total of  275.00  from holding Traton SE or generate 9.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Apollo Medical Holdings  vs.  Traton SE

Apollo Medical Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Medical Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Apollo Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Traton SE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Traton SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Traton SE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Apollo Medical and Traton SE

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

The idea behind Apollo Medical Holdings and Traton SE 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.