Correlation Between Mitsui Chemicals and Apollo Medical

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

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

Diversification Opportunities for Mitsui Chemicals and Apollo Medical

-0.13

Correlation Coefficient

Mitsui Chemicals  Apollo Medical

Good diversification

The 3 months correlation between Mitsui and Apollo is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mitsui Chemicals and Apollo Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Medical Holdings and Mitsui Chemicals 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 Mitsui Chemicals are associated (or correlated) with Apollo Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Medical Holdings has no effect on the direction of Mitsui Chemicals i.e., Mitsui Chemicals and Apollo Medical go up and down completely randomly.

Pair Corralation between Mitsui Chemicals and Apollo Medical

Assuming the 90 days trading horizon Mitsui Chemicals is expected to under-perform the Apollo Medical. But the stock apears to be less risky and, when comparing its historical volatility, Mitsui Chemicals is 1.01 times less risky than Apollo Medical. The stock trades about -0.13 of its potential returns per unit of risk. The Apollo Medical Holdings is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,580  in Apollo Medical Holdings on September 21, 2024 and sell it today you would lose (240.00) from holding Apollo Medical Holdings or give up 6.7% of portfolio value over 90 days.

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

Mitsui Chemicals  vs.  Apollo Medical Holdings

Mitsui Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitsui Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Apollo Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Medical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Apollo Medical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mitsui Chemicals and Apollo Medical

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

The idea behind Mitsui Chemicals and Apollo Medical Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.