Correlation Between Aterian and Apogee Enterprises

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

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

Diversification Opportunities for Aterian and Apogee Enterprises

-0.58

Correlation Coefficient

Aterian  Apogee Enterprises

Excellent diversification

The 3 months correlation between Aterian and Apogee is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aterian and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises and Aterian 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 Aterian are associated (or correlated) with Apogee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apogee Enterprises has no effect on the direction of Aterian i.e., Aterian and Apogee Enterprises go up and down completely randomly.

Pair Corralation between Aterian and Apogee Enterprises

Given the investment horizon of 90 days Aterian is expected to under-perform the Apogee Enterprises. But the stock apears to be less risky and, when comparing its historical volatility, Aterian is 1.18 times less risky than Apogee Enterprises. The stock trades about -0.14 of its potential returns per unit of risk. The Apogee Enterprises is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,666  in Apogee Enterprises on September 15, 2024 and sell it today you would earn a total of  1,014  from holding Apogee Enterprises or generate 15.21% return on investment over 90 days.

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

Aterian  vs.  Apogee Enterprises

Aterian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aterian has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Apogee Enterprises

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apogee Enterprises are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Apogee Enterprises reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aterian and Apogee Enterprises

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

The idea behind Aterian and Apogee Enterprises 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.