Correlation Between Analog Devices and Apollomics

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

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

Diversification Opportunities for Analog Devices and Apollomics

0.22

Correlation Coefficient

Analog Devices  Apollomics

Modest diversification

The 3 months correlation between Analog and Apollomics is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Apollomics Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollomics Class A and Analog Devices 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 Analog Devices are associated (or correlated) with Apollomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollomics Class A has no effect on the direction of Analog Devices i.e., Analog Devices and Apollomics go up and down completely randomly.

Pair Corralation between Analog Devices and Apollomics

Considering the 90-day investment horizon Analog Devices is expected to generate 17.73 times less return on investment than Apollomics. But when comparing it to its historical volatility, Analog Devices is 8.09 times less risky than Apollomics. It trades about 0.03 of its potential returns per unit of risk. Apollomics Class A is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,130  in Apollomics Class A on September 3, 2024 and sell it today you would earn a total of  23.00  from holding Apollomics Class A or generate 2.04% return on investment over 90 days.

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

Analog Devices  vs.  Apollomics Class A

Analog Devices

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Analog Devices are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Analog Devices is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Apollomics Class A

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apollomics Class A are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent essential indicators, Apollomics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Analog Devices and Apollomics

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

The idea behind Analog Devices and Apollomics Class A 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 Transaction History module to view history of all your transactions and understand their impact on performance.