Correlation Between Apollo Power and Sunflow Sustain

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

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

Diversification Opportunities for Apollo Power and Sunflow Sustain

0.29

Correlation Coefficient

Apollo Power  Sunflow Sustain

Modest diversification

The 3 months correlation between Apollo and Sunflow is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Power and Sunflow Sustain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunflow Sustain and Apollo Power 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 Power are associated (or correlated) with Sunflow Sustain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunflow Sustain has no effect on the direction of Apollo Power i.e., Apollo Power and Sunflow Sustain go up and down completely randomly.

Pair Corralation between Apollo Power and Sunflow Sustain

Assuming the 90 days trading horizon Apollo Power is expected to generate 2.61 times more return on investment than Sunflow Sustain. However, Apollo Power is 2.61 times more volatile than Sunflow Sustain. It trades about 0.33 of its potential returns per unit of risk. Sunflow Sustain is currently generating about 0.08 per unit of risk. If you would invest  24,790  in Apollo Power on September 15, 2024 and sell it today you would earn a total of  15,840  from holding Apollo Power or generate 63.9% return on investment over 90 days.

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

Apollo Power  vs.  Sunflow Sustain

Apollo Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Power 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.

Sunflow Sustain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunflow Sustain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Apollo Power and Sunflow Sustain

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

The idea behind Apollo Power and Sunflow Sustain 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 Commodity Directory module to find actively traded commodities issued by global exchanges.