Correlation Between APEX International and Alcor Micro

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

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

Diversification Opportunities for APEX International and Alcor Micro

0.1

Correlation Coefficient

APEX International  Alcor Micro

Average diversification

The 3 months correlation between APEX and Alcor is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding APEX International Financial and Alcor Micro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcor Micro and APEX International 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 APEX International Financial are associated (or correlated) with Alcor Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcor Micro has no effect on the direction of APEX International i.e., APEX International and Alcor Micro go up and down completely randomly.

Pair Corralation between APEX International and Alcor Micro

Assuming the 90 days trading horizon APEX International Financial is expected to under-perform the Alcor Micro. In addition to that, APEX International is 1.01 times more volatile than Alcor Micro. It trades about -0.03 of its total potential returns per unit of risk. Alcor Micro is currently generating about -0.03 per unit of volatility. If you would invest  16,950  in Alcor Micro on September 14, 2024 and sell it today you would lose (3,200) from holding Alcor Micro or give up 18.88% of portfolio value over 90 days.

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

APEX International Financial  vs.  Alcor Micro

APEX International

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in APEX International Financial are ranked lower than 6 (%) 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.

Alcor Micro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alcor Micro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Alcor Micro is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with APEX International and Alcor Micro

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

The idea behind APEX International Financial and Alcor Micro 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.