Correlation Between Celestia and Aptos

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

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

Diversification Opportunities for Celestia and Aptos

0.63

Correlation Coefficient

Celestia  Aptos

Poor diversification

The 3 months correlation between Celestia and Aptos is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Celestia and Aptos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptos and Celestia 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 Celestia are associated (or correlated) with Aptos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptos has no effect on the direction of Celestia i.e., Celestia and Aptos go up and down completely randomly.

Pair Corralation between Celestia and Aptos

Assuming the 90 days trading horizon Celestia is expected to generate 1.02 times less return on investment than Aptos. In addition to that, Celestia is 1.15 times more volatile than Aptos. It trades about 0.19 of its total potential returns per unit of risk. Aptos is currently generating about 0.23 per unit of volatility. If you would invest  613.00  in Aptos on September 2, 2024 and sell it today you would earn a total of  726.00  from holding Aptos or generate 118.43% return on investment over 90 days.

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

Celestia  vs.  Aptos

Celestia

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Celestia are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Celestia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aptos

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aptos are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Aptos exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celestia and Aptos

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

The idea behind Celestia and Aptos 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.