Correlation Between API3 and BEZ

Can any of the company-specific risk be diversified away by investing in both API3 and BEZ 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 API3 and BEZ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between API3 and BEZ, you can compare the effects of market volatilities on API3 and BEZ 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 API3 with a short position of BEZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of API3 and BEZ.

Diversification Opportunities for API3 and BEZ

-0.15

Correlation Coefficient

API3  BEZ

Good diversification

The 3 months correlation between API3 and BEZ is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding API3 and BEZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEZ and API3 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 API3 are associated (or correlated) with BEZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEZ has no effect on the direction of API3 i.e., API3 and BEZ go up and down completely randomly.

Pair Corralation between API3 and BEZ

If you would invest  24.00  in BEZ on January 24, 2024 and sell it today you would earn a total of  0.00  from holding BEZ or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

API3  vs.  BEZ

API3

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in API3 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, API3 exhibited solid returns over the last few months and may actually be approaching a breakup point.

BEZ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BEZ has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BEZ is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with API3 and BEZ

The main advantage of trading using opposite API3 and BEZ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if API3 position performs unexpectedly, BEZ 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 BEZ will offset losses from the drop in BEZ's long position.

The idea behind API3 and BEZ 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.