Correlation Between ApplyDirect and Encounter Resources

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

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

Diversification Opportunities for ApplyDirect and Encounter Resources

-0.13

Correlation Coefficient

ApplyDirect  Encounter Resources

Good diversification

The 3 months correlation between ApplyDirect and Encounter is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding ApplyDirect and Encounter Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encounter Resources and ApplyDirect 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 ApplyDirect are associated (or correlated) with Encounter Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encounter Resources has no effect on the direction of ApplyDirect i.e., ApplyDirect and Encounter Resources go up and down completely randomly.

Pair Corralation between ApplyDirect and Encounter Resources

Assuming the 90 days trading horizon ApplyDirect is expected to generate 1.91 times more return on investment than Encounter Resources. However, ApplyDirect is 1.91 times more volatile than Encounter Resources. It trades about 0.04 of its potential returns per unit of risk. Encounter Resources is currently generating about -0.06 per unit of risk. If you would invest  5.00  in ApplyDirect on September 12, 2024 and sell it today you would earn a total of  0.00  from holding ApplyDirect or generate 0.0% return on investment over 90 days.

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

ApplyDirect  vs.  Encounter Resources

ApplyDirect

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ApplyDirect are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ApplyDirect unveiled solid returns over the last few months and may actually be approaching a breakup point.

Encounter Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Encounter Resources 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.

Pair Trading with ApplyDirect and Encounter Resources

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

The idea behind ApplyDirect and Encounter Resources 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.