Correlation Between Essential Properties and APPTECH CORP

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

Diversification Opportunities for Essential Properties and APPTECH CORP

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Essential and APPTECH is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Essential Properties Realty and APPTECH CORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPTECH CORP and Essential Properties 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 Essential Properties Realty are associated (or correlated) with APPTECH CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPTECH CORP has no effect on the direction of Essential Properties i.e., Essential Properties and APPTECH CORP go up and down completely randomly.

Pair Corralation between Essential Properties and APPTECH CORP

Given the investment horizon of 90 days Essential Properties Realty is expected to under-perform the APPTECH CORP. But the stock apears to be less risky and, when comparing its historical volatility, Essential Properties Realty is 3.5 times less risky than APPTECH CORP. The stock trades about -0.09 of its potential returns per unit of risk. The APPTECH CORP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  60.00  in APPTECH CORP on July 2, 2022 and sell it today you would earn a total of  9.00  from holding APPTECH CORP or generate 15.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Essential Properties Realty  vs.  APPTECH CORP

 Performance (%) 
       Timeline  
Essential Properties 
Essential Performance
0 of 100
Over the last 90 days Essential Properties Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Essential Price Channel

APPTECH CORP 
APPTECH Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in APPTECH CORP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, APPTECH CORP showed solid returns over the last few months and may actually be approaching a breakup point.

APPTECH Price Channel

Essential Properties and APPTECH CORP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Essential Properties and APPTECH CORP

The main advantage of trading using opposite Essential Properties and APPTECH CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essential Properties position performs unexpectedly, APPTECH CORP 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 APPTECH CORP will offset losses from the drop in APPTECH CORP's long position.
Essential Properties vs. WP Carey Co
The idea behind Essential Properties Realty and APPTECH CORP 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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