Correlation Between Apollo Endosurgery and Medtronic PLC

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

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

Diversification Opportunities for Apollo Endosurgery and Medtronic PLC

-0.64

Correlation Coefficient

Apollo Endosurgery  Medtronic PLC

Excellent diversification

The 3 months correlation between Apollo and Medtronic is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Endosurgery and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic PLC and Apollo Endosurgery 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 Apollo Endosurgery are associated (or correlated) with Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of Apollo Endosurgery i.e., Apollo Endosurgery and Medtronic PLC go up and down completely randomly.

Pair Corralation between Apollo Endosurgery and Medtronic PLC

If you would invest  1,000.00  in Apollo Endosurgery on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Apollo Endosurgery or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.61%
Values	Daily Returns

Apollo Endosurgery  vs.  Medtronic PLC

Apollo Endosurgery

Risk-Adjusted Performance

0 of 100

Very Weak

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

Medtronic PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medtronic PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Medtronic PLC is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apollo Endosurgery and Medtronic PLC

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

The idea behind Apollo Endosurgery and Medtronic PLC 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.