Correlation Between Apex Healthcare and Press Metal

Can any of the company-specific risk be diversified away by investing in both Apex Healthcare and Press Metal 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 Healthcare and Press Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apex Healthcare Bhd and Press Metal Bhd, you can compare the effects of market volatilities on Apex Healthcare and Press Metal 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 Healthcare with a short position of Press Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apex Healthcare and Press Metal.

Diversification Opportunities for Apex Healthcare and Press Metal

0.18

Correlation Coefficient

Apex Healthcare  Press Metal

Average diversification

The 3 months correlation between Apex and Press is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Apex Healthcare Bhd and Press Metal Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Press Metal Bhd and Apex Healthcare 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 Healthcare Bhd are associated (or correlated) with Press Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Press Metal Bhd has no effect on the direction of Apex Healthcare i.e., Apex Healthcare and Press Metal go up and down completely randomly.

Pair Corralation between Apex Healthcare and Press Metal

Assuming the 90 days trading horizon Apex Healthcare Bhd is expected to generate 0.85 times more return on investment than Press Metal. However, Apex Healthcare Bhd is 1.17 times less risky than Press Metal. It trades about 0.02 of its potential returns per unit of risk. Press Metal Bhd is currently generating about 0.0 per unit of risk. If you would invest  231.00  in Apex Healthcare Bhd on September 26, 2024 and sell it today you would earn a total of  14.00  from holding Apex Healthcare Bhd or generate 6.06% return on investment over 90 days.

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

Apex Healthcare Bhd  vs.  Press Metal Bhd

Apex Healthcare Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apex Healthcare Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Press Metal Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Press Metal Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Press Metal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Apex Healthcare and Press Metal

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

The idea behind Apex Healthcare Bhd and Press Metal Bhd 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.