Correlation Between Apollo Power and Icon

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

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

Diversification Opportunities for Apollo Power and Icon

0.8

Correlation Coefficient

Apollo Power  Icon

Very poor diversification

The 3 months correlation between Apollo and Icon is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Power and Icon Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Group and Apollo Power 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 Power are associated (or correlated) with Icon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Group has no effect on the direction of Apollo Power i.e., Apollo Power and Icon go up and down completely randomly.

Pair Corralation between Apollo Power and Icon

Assuming the 90 days trading horizon Apollo Power is expected to generate 1.33 times more return on investment than Icon. However, Apollo Power is 1.33 times more volatile than Icon Group. It trades about 0.2 of its potential returns per unit of risk. Icon Group is currently generating about 0.07 per unit of risk. If you would invest  25,630  in Apollo Power on April 23, 2025 and sell it today you would earn a total of  12,560  from holding Apollo Power or generate 49.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.96%
Values	Daily Returns

Apollo Power  vs.  Icon Group

Apollo Power

Risk-Adjusted Performance

Good

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

Icon Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Icon Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Icon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apollo Power and Icon

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

The idea behind Apollo Power and Icon Group 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.