Correlation Between Apx Acquisition and Caterpillar

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

Diversification Opportunities for Apx Acquisition and Caterpillar

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Apx Acquisition and Caterpillar is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Apx Acquisition Corp and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Apx Acquisition 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 Apx Acquisition Corp are associated (or correlated) with Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of Apx Acquisition i.e., Apx Acquisition and Caterpillar go up and down completely randomly.

Pair Corralation between Apx Acquisition and Caterpillar

Given the investment horizon of 90 days Apx Acquisition Corp is expected to generate 0.05 times more return on investment than Caterpillar. However, Apx Acquisition Corp is 20.97 times less risky than Caterpillar. It trades about 0.17 of its potential returns per unit of risk. Caterpillar is currently generating about -0.08 per unit of risk. If you would invest  1,000.00  in Apx Acquisition Corp on June 27, 2022 and sell it today you would earn a total of  11.00  from holding Apx Acquisition Corp or generate 1.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.46%
ValuesDaily Returns

Apx Acquisition Corp  vs.  Caterpillar

 Performance (%) 
       Timeline  
Apx Acquisition Corp 
Apx Acquisition Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apx Acquisition Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Apx Acquisition is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Apx Acquisition Price Channel

Caterpillar 
Caterpillar Performance
0 of 100
Over the last 90 days Caterpillar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Caterpillar Price Channel

Apx Acquisition and Caterpillar Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apx Acquisition and Caterpillar

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