Correlation Between APAC Resources and ProConcept Marketing

Can any of the company-specific risk be diversified away by investing in both APAC Resources and ProConcept Marketing 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 ProConcept Marketing 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 ProConcept Marketing Group, you can compare the effects of market volatilities on APAC Resources and ProConcept Marketing 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 ProConcept Marketing. Check out your portfolio center. Please also check ongoing floating volatility patterns of APAC Resources and ProConcept Marketing.

Diversification Opportunities for APAC Resources and ProConcept Marketing

-0.8

Correlation Coefficient

APAC Resources  ProConcept Marketing

Pay attention - limited upside

The 3 months correlation between APAC and ProConcept is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding APAC Resources Limited and ProConcept Marketing Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProConcept Marketing 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 ProConcept Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProConcept Marketing has no effect on the direction of APAC Resources i.e., APAC Resources and ProConcept Marketing go up and down completely randomly.

Pair Corralation between APAC Resources and ProConcept Marketing

Assuming the 90 days horizon APAC Resources Limited is expected to generate 0.07 times more return on investment than ProConcept Marketing. However, APAC Resources Limited is 14.4 times less risky than ProConcept Marketing. It trades about 0.13 of its potential returns per unit of risk. ProConcept Marketing Group is currently generating about -0.01 per unit of risk. If you would invest  10.00  in APAC Resources Limited on August 30, 2024 and sell it today you would earn a total of  1.00  from holding APAC Resources Limited or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	90.63%
Values	Daily Returns

APAC Resources Limited  vs.  ProConcept Marketing Group

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 December 2024.

ProConcept Marketing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProConcept Marketing Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with APAC Resources and ProConcept Marketing

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

The idea behind APAC Resources Limited and ProConcept Marketing Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.