Correlation Between AAPICO Hitech and Central Plaza

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

By analyzing existing cross correlation between AAPICO Hitech Public and Central Plaza Hotel, you can compare the effects of market volatilities on AAPICO Hitech and Central Plaza 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 AAPICO Hitech with a short position of Central Plaza. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAPICO Hitech and Central Plaza.

Diversification Opportunities for AAPICO Hitech and Central Plaza

0.59

Correlation Coefficient

AAPICO Hitech  Central Plaza

Very weak diversification

The 3 months correlation between AAPICO and Central is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding AAPICO Hitech Public and Central Plaza Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Plaza Hotel and AAPICO Hitech 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 AAPICO Hitech Public are associated (or correlated) with Central Plaza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Plaza Hotel has no effect on the direction of AAPICO Hitech i.e., AAPICO Hitech and Central Plaza go up and down completely randomly.

Pair Corralation between AAPICO Hitech and Central Plaza

Assuming the 90 days horizon AAPICO Hitech Public is expected to under-perform the Central Plaza. In addition to that, AAPICO Hitech is 1.05 times more volatile than Central Plaza Hotel. It trades about -0.07 of its total potential returns per unit of risk. Central Plaza Hotel is currently generating about 0.12 per unit of volatility. If you would invest  3,425  in Central Plaza Hotel on September 12, 2024 and sell it today you would earn a total of  175.00  from holding Central Plaza Hotel or generate 5.11% return on investment over 90 days.

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

AAPICO Hitech Public  vs.  Central Plaza Hotel

AAPICO Hitech Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Central Plaza Hotel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Plaza Hotel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Central Plaza is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AAPICO Hitech and Central Plaza

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

The idea behind AAPICO Hitech Public and Central Plaza Hotel 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.