Correlation Between Avanos Medical and Apollo Medical

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

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

Diversification Opportunities for Avanos Medical and Apollo Medical

-0.05

Correlation Coefficient

Avanos Medical  Apollo Medical

Good diversification

The 3 months correlation between Avanos and Apollo is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Avanos Medical and Apollo Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Medical Holdings and Avanos 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 Avanos Medical are associated (or correlated) with Apollo Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Medical Holdings has no effect on the direction of Avanos Medical i.e., Avanos Medical and Apollo Medical go up and down completely randomly.

Pair Corralation between Avanos Medical and Apollo Medical

Assuming the 90 days trading horizon Avanos Medical is expected to under-perform the Apollo Medical. In addition to that, Avanos Medical is 1.79 times more volatile than Apollo Medical Holdings. It trades about -0.15 of its total potential returns per unit of risk. Apollo Medical Holdings is currently generating about -0.1 per unit of volatility. If you would invest  3,580  in Apollo Medical Holdings on September 30, 2024 and sell it today you would lose (420.00) from holding Apollo Medical Holdings or give up 11.73% of portfolio value over 90 days.

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

Avanos Medical  vs.  Apollo Medical Holdings

Avanos Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avanos Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Apollo Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Medical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Avanos Medical and Apollo Medical

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

The idea behind Avanos Medical and Apollo Medical 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.