Correlation Between AAPICO Hitech and SP Syndicate

Can any of the company-specific risk be diversified away by investing in both AAPICO Hitech and SP Syndicate 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 SP Syndicate 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 SP Syndicate Public, you can compare the effects of market volatilities on AAPICO Hitech and SP Syndicate 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 SP Syndicate. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAPICO Hitech and SP Syndicate.

Diversification Opportunities for AAPICO Hitech and SP Syndicate

0.84

Correlation Coefficient

AAPICO Hitech  SP Syndicate

Very poor diversification

The 3 months correlation between AAPICO and SNP is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding AAPICO Hitech Public and SP Syndicate Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Syndicate Public 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 SP Syndicate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Syndicate Public has no effect on the direction of AAPICO Hitech i.e., AAPICO Hitech and SP Syndicate go up and down completely randomly.

Pair Corralation between AAPICO Hitech and SP Syndicate

Assuming the 90 days horizon AAPICO Hitech Public is expected to under-perform the SP Syndicate. In addition to that, AAPICO Hitech is 1.99 times more volatile than SP Syndicate Public. It trades about -0.14 of its total potential returns per unit of risk. SP Syndicate Public is currently generating about -0.25 per unit of volatility. If you would invest  1,300  in SP Syndicate Public on September 16, 2024 and sell it today you would lose (230.00) from holding SP Syndicate Public or give up 17.69% of portfolio value over 90 days.

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

AAPICO Hitech Public  vs.  SP Syndicate Public

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 weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

SP Syndicate Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SP Syndicate Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with AAPICO Hitech and SP Syndicate

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

The idea behind AAPICO Hitech Public and SP Syndicate Public 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.