Correlation Between Renren and APA

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

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

Diversification Opportunities for Renren and APA

-0.22

Correlation Coefficient

Renren  APA

Very good diversification

The 3 months correlation between Renren and APA is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Renren Inc and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation and Renren 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 Renren Inc are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of Renren i.e., Renren and APA go up and down completely randomly.

Pair Corralation between Renren and APA

If you would invest  117.00  in Renren Inc on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Renren Inc 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

Renren Inc  vs.  APA Corp.

Renren Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

APA Corporation

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in APA Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, APA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Renren and APA

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

The idea behind Renren Inc and APA Corporation 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.