Correlation Between APG Securities and Cotec Construction

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

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

Diversification Opportunities for APG Securities and Cotec Construction

-0.61

Correlation Coefficient

APG Securities  Cotec Construction

Excellent diversification

The 3 months correlation between APG and Cotec is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding APG Securities Joint and Cotec Construction JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cotec Construction JSC and APG Securities 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 APG Securities Joint are associated (or correlated) with Cotec Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cotec Construction JSC has no effect on the direction of APG Securities i.e., APG Securities and Cotec Construction go up and down completely randomly.

Pair Corralation between APG Securities and Cotec Construction

Assuming the 90 days trading horizon APG Securities Joint is expected to under-perform the Cotec Construction. But the stock apears to be less risky and, when comparing its historical volatility, APG Securities Joint is 1.5 times less risky than Cotec Construction. The stock trades about -0.17 of its potential returns per unit of risk. The Cotec Construction JSC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,550,000  in Cotec Construction JSC on September 18, 2024 and sell it today you would earn a total of  100,000  from holding Cotec Construction JSC or generate 1.53% return on investment over 90 days.

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

APG Securities Joint  vs.  Cotec Construction JSC

APG Securities Joint

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APG Securities Joint has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, APG Securities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Cotec Construction JSC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cotec Construction JSC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Cotec Construction may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with APG Securities and Cotec Construction

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

The idea behind APG Securities Joint and Cotec Construction JSC 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.