Correlation Between Aptos and STEEMD

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

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

Diversification Opportunities for Aptos and STEEMD

0.77

Correlation Coefficient

Aptos  STEEMD

Poor diversification

The 3 months correlation between Aptos and STEEMD is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aptos and STEEMD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEMD 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 STEEMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEMD has no effect on the direction of Aptos i.e., Aptos and STEEMD go up and down completely randomly.

Pair Corralation between Aptos and STEEMD

Assuming the 90 days trading horizon Aptos is expected to generate 1.0 times more return on investment than STEEMD. However, Aptos is 1.0 times more volatile than STEEMD. It trades about 0.23 of its potential returns per unit of risk. STEEMD is currently generating about 0.16 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	Significant
Accuracy	100.0%
Values	Daily Returns

Aptos  vs.  STEEMD

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.

STEEMD

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STEEMD are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, STEEMD sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptos and STEEMD

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

The idea behind Aptos and STEEMD 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.