Correlation Between Apogee Enterprises and Perma Pipe

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

By analyzing existing cross correlation between Apogee Enterprises and Perma Pipe International Holdings, you can compare the effects of market volatilities on Apogee Enterprises and Perma Pipe 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 Apogee Enterprises with a short position of Perma Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apogee Enterprises and Perma Pipe.

Diversification Opportunities for Apogee Enterprises and Perma Pipe

0.52

Correlation Coefficient

Apogee Enterprises  Perma Pipe

Very weak diversification

The 3 months correlation between Apogee and Perma is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and Perma Pipe International Holdi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Pipe Internati and Apogee Enterprises 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 Apogee Enterprises are associated (or correlated) with Perma Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Pipe Internati has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and Perma Pipe go up and down completely randomly.

Pair Corralation between Apogee Enterprises and Perma Pipe

Given the investment horizon of 90 days Apogee Enterprises is expected to generate 0.63 times more return on investment than Perma Pipe. However, Apogee Enterprises is 1.59 times less risky than Perma Pipe. It trades about 0.11 of its potential returns per unit of risk. Perma Pipe International Holdings is currently generating about 0.0 per unit of risk. If you would invest  4,116  in Apogee Enterprises on February 14, 2024 and sell it today you would earn a total of  2,532  from holding Apogee Enterprises or generate 61.52% return on investment over 90 days.

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

Apogee Enterprises  vs.  Perma Pipe International Holdi

Apogee Enterprises

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apogee Enterprises are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Apogee Enterprises reported solid returns over the last few months and may actually be approaching a breakup point.

Perma Pipe Internati

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perma Pipe International Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Perma Pipe may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Apogee Enterprises and Perma Pipe

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

The idea behind Apogee Enterprises and Perma Pipe International Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.