Correlation Between Apollo Investment and SIEMENS HEALTH

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

By analyzing existing cross correlation between Apollo Investment Corp and SIEMENS HEALTH ADR050, you can compare the effects of market volatilities on Apollo Investment and SIEMENS HEALTH 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 Investment with a short position of SIEMENS HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Investment and SIEMENS HEALTH.

Diversification Opportunities for Apollo Investment and SIEMENS HEALTH

-0.04

Correlation Coefficient

Apollo Investment  SIEMENS HEALTH

Good diversification

The 3 months correlation between Apollo and SIEMENS is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment Corp and SIEMENS HEALTH ADR050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIEMENS HEALTH ADR050 and Apollo Investment 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 Investment Corp are associated (or correlated) with SIEMENS HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIEMENS HEALTH ADR050 has no effect on the direction of Apollo Investment i.e., Apollo Investment and SIEMENS HEALTH go up and down completely randomly.

Pair Corralation between Apollo Investment and SIEMENS HEALTH

Assuming the 90 days trading horizon Apollo Investment Corp is expected to generate 0.43 times more return on investment than SIEMENS HEALTH. However, Apollo Investment Corp is 2.32 times less risky than SIEMENS HEALTH. It trades about 0.17 of its potential returns per unit of risk. SIEMENS HEALTH ADR050 is currently generating about 0.03 per unit of risk. If you would invest  1,180  in Apollo Investment Corp on September 12, 2024 and sell it today you would earn a total of  123.00  from holding Apollo Investment Corp or generate 10.42% return on investment over 90 days.

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

Apollo Investment Corp  vs.  SIEMENS HEALTH ADR050

Apollo Investment Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Investment Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Apollo Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SIEMENS HEALTH ADR050

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SIEMENS HEALTH ADR050 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, SIEMENS HEALTH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Apollo Investment and SIEMENS HEALTH

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

The idea behind Apollo Investment Corp and SIEMENS HEALTH ADR050 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.