Correlation Between APT Systems and AB International

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

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

Diversification Opportunities for APT Systems and AB International

-0.04

Correlation Coefficient

APT Systems  AB International

Good diversification

The 3 months correlation between APT and ABQQ is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding APT Systems and AB International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB International and APT Systems 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 APT Systems are associated (or correlated) with AB International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB International has no effect on the direction of APT Systems i.e., APT Systems and AB International go up and down completely randomly.

Pair Corralation between APT Systems and AB International

Given the investment horizon of 90 days APT Systems is expected to generate 1.16 times more return on investment than AB International. However, APT Systems is 1.16 times more volatile than AB International Group. It trades about 0.11 of its potential returns per unit of risk. AB International Group is currently generating about 0.12 per unit of risk. If you would invest  0.04  in APT Systems on September 24, 2024 and sell it today you would earn a total of  0.01  from holding APT Systems or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

APT Systems  vs.  AB International Group

APT Systems

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in APT Systems are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, APT Systems showed solid returns over the last few months and may actually be approaching a breakup point.

AB International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AB International Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, AB International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APT Systems and AB International

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

The idea behind APT Systems and AB International 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.