Correlation Between Matrix Service and Api GroupCorp

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

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

Diversification Opportunities for Matrix Service and Api GroupCorp

0.8

Correlation Coefficient

Matrix Service  Api GroupCorp

Very poor diversification

The 3 months correlation between Matrix and Api is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Matrix Service Co and Api GroupCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Api GroupCorp and Matrix Service 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 Matrix Service Co are associated (or correlated) with Api GroupCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Api GroupCorp has no effect on the direction of Matrix Service i.e., Matrix Service and Api GroupCorp go up and down completely randomly.

Pair Corralation between Matrix Service and Api GroupCorp

Given the investment horizon of 90 days Matrix Service Co is expected to under-perform the Api GroupCorp. But the stock apears to be less risky and, when comparing its historical volatility, Matrix Service Co is 1.2 times less risky than Api GroupCorp. The stock trades about -0.43 of its potential returns per unit of risk. The Api GroupCorp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,890  in Api GroupCorp on February 1, 2024 and sell it today you would lose (33.00) from holding Api GroupCorp or give up 0.85% of portfolio value over 90 days.

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

Matrix Service Co  vs.  Api GroupCorp

Matrix Service

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix Service Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Matrix Service showed solid returns over the last few months and may actually be approaching a breakup point.

Api GroupCorp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Api GroupCorp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Api GroupCorp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matrix Service and Api GroupCorp

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

The idea behind Matrix Service Co and Api GroupCorp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.