Correlation Between Apex Frozen and Honeywell Automation

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

By analyzing existing cross correlation between Apex Frozen Foods and Honeywell Automation India, you can compare the effects of market volatilities on Apex Frozen and Honeywell Automation 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 Apex Frozen with a short position of Honeywell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apex Frozen and Honeywell Automation.

Diversification Opportunities for Apex Frozen and Honeywell Automation

0.08

Correlation Coefficient

Apex Frozen  Honeywell Automation

Significant diversification

The 3 months correlation between Apex and Honeywell is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Apex Frozen Foods and Honeywell Automation India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell Automation and Apex Frozen 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 Apex Frozen Foods are associated (or correlated) with Honeywell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honeywell Automation has no effect on the direction of Apex Frozen i.e., Apex Frozen and Honeywell Automation go up and down completely randomly.

Pair Corralation between Apex Frozen and Honeywell Automation

Assuming the 90 days trading horizon Apex Frozen Foods is expected to generate 1.9 times more return on investment than Honeywell Automation. However, Apex Frozen is 1.9 times more volatile than Honeywell Automation India. It trades about 0.05 of its potential returns per unit of risk. Honeywell Automation India is currently generating about -0.21 per unit of risk. If you would invest  24,600  in Apex Frozen Foods on September 19, 2024 and sell it today you would earn a total of  1,491  from holding Apex Frozen Foods or generate 6.06% return on investment over 90 days.

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

Apex Frozen Foods  vs.  Honeywell Automation India

Apex Frozen Foods

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apex Frozen Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Apex Frozen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Honeywell Automation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Honeywell Automation India 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 basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Apex Frozen and Honeywell Automation

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

The idea behind Apex Frozen Foods and Honeywell Automation India 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.