Correlation Between Apollo Investment and Burford Capital

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Can any of the company-specific risk be diversified away by investing in both Apollo Investment and Burford Capital 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 Investment and Burford Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Investment and Burford Capital, you can compare the effects of market volatilities on Apollo Investment and Burford Capital 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 Investment with a short position of Burford Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Investment and Burford Capital.

Diversification Opportunities for Apollo Investment and Burford Capital

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between Apollo and Burford is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Investment and Burford Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burford Capital and Apollo Investment 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 Investment are associated (or correlated) with Burford Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burford Capital has no effect on the direction of Apollo Investment i.e., Apollo Investment and Burford Capital go up and down completely randomly.

Pair Corralation between Apollo Investment and Burford Capital

Given the investment horizon of 90 days Apollo Investment is expected to generate 0.85 times more return on investment than Burford Capital. However, Apollo Investment is 1.18 times less risky than Burford Capital. It trades about 0.41 of its potential returns per unit of risk. Burford Capital is currently generating about 0.19 per unit of risk. If you would invest  1,114  in Apollo Investment on May 10, 2022 and sell it today you would earn a total of  192.00  from holding Apollo Investment or generate 17.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Apollo Investment  vs.  Burford Capital

 Performance (%) 
       Timeline  
Apollo Investment 
Apollo Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Apollo Investment showed solid returns over the last few months and may actually be approaching a breakup point.

Apollo Price Channel

Burford Capital 
Burford Performance
20 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Burford Capital are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Burford Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Burford Price Channel

Apollo Investment and Burford Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apollo Investment and Burford Capital

The main advantage of trading using opposite Apollo Investment and Burford Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Investment position performs unexpectedly, Burford Capital 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 Burford Capital will offset losses from the drop in Burford Capital's long position.
The idea behind Apollo Investment and Burford Capital 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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