Correlation Between Generation Capital and Apollo Power

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

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

Diversification Opportunities for Generation Capital and Apollo Power

0.83

Correlation Coefficient

Generation Capital  Apollo Power

Very poor diversification

The 3 months correlation between Generation and Apollo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Generation Capital and Apollo Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Power and Generation 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 Generation Capital are associated (or correlated) with Apollo Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Power has no effect on the direction of Generation Capital i.e., Generation Capital and Apollo Power go up and down completely randomly.

Pair Corralation between Generation Capital and Apollo Power

Assuming the 90 days trading horizon Generation Capital is expected to generate 0.47 times more return on investment than Apollo Power. However, Generation Capital is 2.11 times less risky than Apollo Power. It trades about 0.13 of its potential returns per unit of risk. Apollo Power is currently generating about -0.01 per unit of risk. If you would invest  10,092  in Generation Capital on July 8, 2025 and sell it today you would earn a total of  1,258  from holding Generation Capital or generate 12.47% return on investment over 90 days.

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

Generation Capital  vs.  Apollo Power

Generation Capital

Risk-Adjusted Performance

Fair

Over the last 90 days Generation Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Generation Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Apollo Power

Risk-Adjusted Performance

Weakest

Over the last 90 days Apollo Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Apollo Power is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Generation Capital and Apollo Power

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

The idea behind Generation Capital and Apollo Power 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 the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.