Correlation Between Sachem Capital and Apollo Commercial

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

By analyzing existing cross correlation between Sachem Capital Corp and Apollo Commercial Real, you can compare the effects of market volatilities on Sachem Capital and Apollo Commercial 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 Sachem Capital with a short position of Apollo Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sachem Capital and Apollo Commercial.

Diversification Opportunities for Sachem Capital and Apollo Commercial

0.35

Correlation Coefficient

Sachem Capital  Apollo Commercial

Weak diversification

The 3 months correlation between Sachem and Apollo is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sachem Capital Corp and Apollo Commercial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Commercial Real and Sachem Capital 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 Sachem Capital Corp are associated (or correlated) with Apollo Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Commercial Real has no effect on the direction of Sachem Capital i.e., Sachem Capital and Apollo Commercial go up and down completely randomly.

Pair Corralation between Sachem Capital and Apollo Commercial

Given the investment horizon of 90 days Sachem Capital Corp is expected to under-perform the Apollo Commercial. But the stock apears to be less risky and, when comparing its historical volatility, Sachem Capital Corp is 1.37 times less risky than Apollo Commercial. The stock trades about -0.23 of its potential returns per unit of risk. The Apollo Commercial Real is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  1,083  in Apollo Commercial Real on February 2, 2024 and sell it today you would lose (83.00) from holding Apollo Commercial Real or give up 7.66% of portfolio value over 90 days.

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

Sachem Capital Corp  vs.  Apollo Commercial Real

Sachem Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sachem Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Sachem Capital is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Apollo Commercial Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apollo Commercial Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Apollo Commercial is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Sachem Capital and Apollo Commercial

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

The idea behind Sachem Capital Corp and Apollo Commercial Real 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.