Correlation Between Parsons Corp and APT Systems

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

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

Diversification Opportunities for Parsons Corp and APT Systems

0.32

Correlation Coefficient

Parsons Corp  APT Systems

Weak diversification

The 3 months correlation between Parsons and APT is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Parsons Corp and APT Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APT Systems and Parsons Corp 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 Parsons Corp are associated (or correlated) with APT Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APT Systems has no effect on the direction of Parsons Corp i.e., Parsons Corp and APT Systems go up and down completely randomly.

Pair Corralation between Parsons Corp and APT Systems

Considering the 90-day investment horizon Parsons Corp is expected to under-perform the APT Systems. But the stock apears to be less risky and, when comparing its historical volatility, Parsons Corp is 9.57 times less risky than APT Systems. The stock trades about -0.03 of its potential returns per unit of risk. The APT Systems is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.05  in APT Systems on September 24, 2024 and sell it today you would earn a total of  0.00  from holding APT Systems or generate 0.0% return on investment over 90 days.

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

Parsons Corp  vs.  APT Systems

Parsons Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Parsons Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Parsons Corp is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Parsons Corp and APT Systems

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

The idea behind Parsons Corp and APT Systems 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 Anywhere module to track or share privately all of your investments from the convenience of any device.