Correlation Between Jupiter and APL

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

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

Diversification Opportunities for Jupiter and APL

-0.56

Correlation Coefficient

Jupiter  APL

Excellent diversification

The 3 months correlation between Jupiter and APL is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Jupiter and APL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APL and Jupiter 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 Jupiter are associated (or correlated) with APL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APL has no effect on the direction of Jupiter i.e., Jupiter and APL go up and down completely randomly.

Pair Corralation between Jupiter and APL

Assuming the 90 days trading horizon Jupiter is expected to generate 0.44 times more return on investment than APL. However, Jupiter is 2.29 times less risky than APL. It trades about 0.17 of its potential returns per unit of risk. APL is currently generating about 0.0 per unit of risk. If you would invest  70.00  in Jupiter on September 1, 2024 and sell it today you would earn a total of  46.00  from holding Jupiter or generate 65.71% return on investment over 90 days.

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

Jupiter  vs.  APL

Jupiter

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jupiter are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Jupiter exhibited solid returns over the last few months and may actually be approaching a breakup point.

APL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, APL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Jupiter and APL

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

The idea behind Jupiter and APL 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.