Correlation Between Apple and Alaska Hydro
Can any of the company-specific risk be diversified away by investing in both Apple and Alaska Hydro 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 Apple and Alaska Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc CDR and Alaska Hydro, you can compare the effects of market volatilities on Apple and Alaska Hydro 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 Apple with a short position of Alaska Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Alaska Hydro.
Diversification Opportunities for Apple and Alaska Hydro
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Apple and Alaska is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Alaska Hydro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Hydro and Apple 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 Apple Inc CDR are associated (or correlated) with Alaska Hydro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Hydro has no effect on the direction of Apple i.e., Apple and Alaska Hydro go up and down completely randomly.
Pair Corralation between Apple and Alaska Hydro
Assuming the 90 days trading horizon Apple is expected to generate 9.07 times less return on investment than Alaska Hydro. But when comparing it to its historical volatility, Apple Inc CDR is 12.14 times less risky than Alaska Hydro. It trades about 0.1 of its potential returns per unit of risk. Alaska Hydro is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3.00 in Alaska Hydro on September 12, 2024 and sell it today you would lose (1.50) from holding Alaska Hydro or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc CDR vs. Alaska Hydro
Performance |
| Timeline |
| Apple Inc CDR |
| Alaska Hydro |
Apple and Alaska Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Alaska Hydro
The main advantage of trading using opposite Apple and Alaska Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Alaska Hydro 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 Alaska Hydro will offset losses from the drop in Alaska Hydro's long position.| Apple vs. Doman Building Materials | Apple vs. Identillect Technologies Corp | Apple vs. NeXGold Mining Corp | Apple vs. Oculus VisionTech |
| Alaska Hydro vs. Jamieson Wellness | Alaska Hydro vs. Globex Mining Enterprises | Alaska Hydro vs. Bausch Health Companies | Alaska Hydro vs. Mako Mining Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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