Correlation Between AP Public and KGI Securities

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

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

Diversification Opportunities for AP Public and KGI Securities

0.83

Correlation Coefficient

AP Public  KGI Securities

Very poor diversification

The 3 months correlation between AP Public and KGI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AP Public and KGI Securities Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGI Securities Public and AP Public 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 AP Public are associated (or correlated) with KGI Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGI Securities Public has no effect on the direction of AP Public i.e., AP Public and KGI Securities go up and down completely randomly.

Pair Corralation between AP Public and KGI Securities

Assuming the 90 days horizon AP Public is expected to under-perform the KGI Securities. In addition to that, AP Public is 3.03 times more volatile than KGI Securities Public. It trades about -0.11 of its total potential returns per unit of risk. KGI Securities Public is currently generating about -0.19 per unit of volatility. If you would invest  450.00  in KGI Securities Public on September 14, 2024 and sell it today you would lose (30.00) from holding KGI Securities Public or give up 6.67% of portfolio value over 90 days.

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

AP Public  vs.  KGI Securities Public

AP Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AP 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.

KGI Securities Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AP Public and KGI Securities

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

The idea behind AP Public and KGI Securities 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.