Correlation Between Aptos and ME

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

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

Diversification Opportunities for Aptos and ME

0.91

Correlation Coefficient

Aptos  ME

Almost no diversification

The 3 months correlation between Aptos and ME is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Aptos and ME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ME and Aptos 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 Aptos are associated (or correlated) with ME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ME has no effect on the direction of Aptos i.e., Aptos and ME go up and down completely randomly.

Pair Corralation between Aptos and ME

Assuming the 90 days trading horizon Aptos is expected to generate 1.8 times more return on investment than ME. However, Aptos is 1.8 times more volatile than ME. It trades about 0.23 of its potential returns per unit of risk. ME is currently generating about 0.25 per unit of risk. If you would invest  613.00  in Aptos on September 1, 2024 and sell it today you would earn a total of  726.00  from holding Aptos or generate 118.43% return on investment over 90 days.

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

Aptos  vs.  ME

Aptos

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aptos are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Aptos exhibited solid returns over the last few months and may actually be approaching a breakup point.

ME

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ME are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, ME exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptos and ME

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

The idea behind Aptos and ME 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.