Correlation Between Xiaomi and Apple
Can any of the company-specific risk be diversified away by investing in both Xiaomi and Apple 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 Xiaomi and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xiaomi and Apple Inc, you can compare the effects of market volatilities on Xiaomi and Apple 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 Xiaomi with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiaomi and Apple.
Diversification Opportunities for Xiaomi and Apple
Poor diversification
The 3 months correlation between Xiaomi and Apple is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Xiaomi and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Xiaomi 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 Xiaomi are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Xiaomi i.e., Xiaomi and Apple go up and down completely randomly.
Pair Corralation between Xiaomi and Apple
Assuming the 90 days horizon Xiaomi is expected to generate 2.07 times more return on investment than Apple. However, Xiaomi is 2.07 times more volatile than Apple Inc. It trades about 0.22 of its potential returns per unit of risk. Apple Inc is currently generating about 0.07 per unit of risk. If you would invest 306.00 in Xiaomi on August 28, 2024 and sell it today you would earn a total of 39.00 from holding Xiaomi or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xiaomi vs. Apple Inc
Performance |
| Timeline |
| Xiaomi |
| Apple Inc |
Xiaomi and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xiaomi and Apple
The main advantage of trading using opposite Xiaomi and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiaomi position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.The idea behind Xiaomi and Apple Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |