Correlation Between Apollo Bancorp and FS Bancorp

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

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

Diversification Opportunities for Apollo Bancorp and FS Bancorp

-0.45

Correlation Coefficient

Apollo Bancorp  FS Bancorp

Very good diversification

The 3 months correlation between Apollo and FXLG is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Bancorp and FS Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Bancorp and Apollo Bancorp 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 Apollo Bancorp are associated (or correlated) with FS Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Bancorp has no effect on the direction of Apollo Bancorp i.e., Apollo Bancorp and FS Bancorp go up and down completely randomly.

Pair Corralation between Apollo Bancorp and FS Bancorp

Given the investment horizon of 90 days Apollo Bancorp is expected to under-perform the FS Bancorp. In addition to that, Apollo Bancorp is 2.4 times more volatile than FS Bancorp. It trades about -0.06 of its total potential returns per unit of risk. FS Bancorp is currently generating about 0.11 per unit of volatility. If you would invest  3,011  in FS Bancorp on September 5, 2024 and sell it today you would earn a total of  94.00  from holding FS Bancorp or generate 3.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Apollo Bancorp  vs.  FS Bancorp

Apollo Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

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

FS Bancorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FS Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, FS Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Apollo Bancorp and FS Bancorp

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

The idea behind Apollo Bancorp and FS Bancorp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.