Correlation Between Apollo Global and Oriental Petroleum

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

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

Diversification Opportunities for Apollo Global and Oriental Petroleum

0.45

Correlation Coefficient

Apollo Global  Oriental Petroleum

Very weak diversification

The 3 months correlation between Apollo and Oriental is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Global Capital and Oriental Petroleum and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Petroleum and and Apollo Global 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 Apollo Global Capital are associated (or correlated) with Oriental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Petroleum and has no effect on the direction of Apollo Global i.e., Apollo Global and Oriental Petroleum go up and down completely randomly.

Pair Corralation between Apollo Global and Oriental Petroleum

Assuming the 90 days trading horizon Apollo Global is expected to generate 2.16 times less return on investment than Oriental Petroleum. But when comparing it to its historical volatility, Apollo Global Capital is 1.59 times less risky than Oriental Petroleum. It trades about 0.1 of its potential returns per unit of risk. Oriental Petroleum and is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.79  in Oriental Petroleum and on April 24, 2025 and sell it today you would earn a total of  0.15  from holding Oriental Petroleum and or generate 18.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	40.0%
Values	Daily Returns

Apollo Global Capital  vs.  Oriental Petroleum and

Apollo Global Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Global Capital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Apollo Global exhibited solid returns over the last few months and may actually be approaching a breakup point.

Oriental Petroleum and

Risk-Adjusted Performance

OK

Over the last 90 days Oriental Petroleum and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady basic indicators, Oriental Petroleum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apollo Global and Oriental Petroleum

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

The idea behind Apollo Global Capital and Oriental Petroleum and 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.