Correlation Between Api GroupCorp and Acorn Energy

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

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

Diversification Opportunities for Api GroupCorp and Acorn Energy

-0.74

Correlation Coefficient

Api GroupCorp  Acorn Energy

Pay attention - limited upside

The 3 months correlation between Api and Acorn is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Api GroupCorp and Acorn Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acorn Energy and Api GroupCorp 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 Api GroupCorp are associated (or correlated) with Acorn Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acorn Energy has no effect on the direction of Api GroupCorp i.e., Api GroupCorp and Acorn Energy go up and down completely randomly.

Pair Corralation between Api GroupCorp and Acorn Energy

Considering the 90-day investment horizon Api GroupCorp is expected to generate 0.49 times more return on investment than Acorn Energy. However, Api GroupCorp is 2.05 times less risky than Acorn Energy. It trades about 0.18 of its potential returns per unit of risk. Acorn Energy is currently generating about 0.07 per unit of risk. If you would invest  2,545  in Api GroupCorp on January 25, 2024 and sell it today you would earn a total of  1,194  from holding Api GroupCorp or generate 46.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	62.6%
Values	Daily Returns

Api GroupCorp  vs.  Acorn Energy

Api GroupCorp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Api GroupCorp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Api GroupCorp reported solid returns over the last few months and may actually be approaching a breakup point.

Acorn Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acorn Energy 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Api GroupCorp and Acorn Energy

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

The idea behind Api GroupCorp and Acorn Energy 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 Commodity Directory module to find actively traded commodities issued by global exchanges.