Correlation Between APAC Resources and BIG Blockchain

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

By analyzing existing cross correlation between APAC Resources Limited and BIG Blockchain Intelligence, you can compare the effects of market volatilities on APAC Resources and BIG Blockchain 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 APAC Resources with a short position of BIG Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of APAC Resources and BIG Blockchain.

Diversification Opportunities for APAC Resources and BIG Blockchain

0.57

Correlation Coefficient

APAC Resources  BIG Blockchain

Very weak diversification

The 3 months correlation between APAC and BIG is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding APAC Resources Limited and BIG Blockchain Intelligence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIG Blockchain Intel and APAC Resources 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 APAC Resources Limited are associated (or correlated) with BIG Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIG Blockchain Intel has no effect on the direction of APAC Resources i.e., APAC Resources and BIG Blockchain go up and down completely randomly.

Pair Corralation between APAC Resources and BIG Blockchain

Assuming the 90 days horizon APAC Resources is expected to generate 4.83 times less return on investment than BIG Blockchain. But when comparing it to its historical volatility, APAC Resources Limited is 5.48 times less risky than BIG Blockchain. It trades about 0.13 of its potential returns per unit of risk. BIG Blockchain Intelligence is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  9.52  in BIG Blockchain Intelligence on September 2, 2024 and sell it today you would earn a total of  4.48  from holding BIG Blockchain Intelligence or generate 47.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.06%
Values	Daily Returns

APAC Resources Limited  vs.  BIG Blockchain Intelligence

APAC Resources

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days APAC Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly conflicting fundamental indicators, APAC Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BIG Blockchain Intel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BIG Blockchain Intelligence are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, BIG Blockchain reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APAC Resources and BIG Blockchain

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

The idea behind APAC Resources Limited and BIG Blockchain Intelligence 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.