Correlation Between Aquarius Engines and Apollo Power

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

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

Diversification Opportunities for Aquarius Engines and Apollo Power

0.68

Correlation Coefficient

Aquarius Engines  Apollo Power

Poor diversification

The 3 months correlation between Aquarius and Apollo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Aquarius Engines AM and Apollo Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Power and Aquarius Engines 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 Aquarius Engines AM are associated (or correlated) with Apollo Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Power has no effect on the direction of Aquarius Engines i.e., Aquarius Engines and Apollo Power go up and down completely randomly.

Pair Corralation between Aquarius Engines and Apollo Power

Assuming the 90 days trading horizon Aquarius Engines AM is expected to generate 0.6 times more return on investment than Apollo Power. However, Aquarius Engines AM is 1.66 times less risky than Apollo Power. It trades about 0.01 of its potential returns per unit of risk. Apollo Power is currently generating about -0.01 per unit of risk. If you would invest  14,430  in Aquarius Engines AM on September 27, 2024 and sell it today you would lose (460.00) from holding Aquarius Engines AM or give up 3.19% of portfolio value over 90 days.

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

Aquarius Engines AM  vs.  Apollo Power

Aquarius Engines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquarius Engines AM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Aquarius Engines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Apollo Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Aquarius Engines and Apollo Power

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

The idea behind Aquarius Engines AM and Apollo Power 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.