Correlation Between Apple and Findev
Can any of the company-specific risk be diversified away by investing in both Apple and Findev 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 Findev 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 Findev Inc, you can compare the effects of market volatilities on Apple and Findev 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 Findev. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Findev.
Diversification Opportunities for Apple and Findev
Very weak diversification
The 3 months correlation between Apple and Findev is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Findev Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Findev Inc 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 Findev. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Findev Inc has no effect on the direction of Apple i.e., Apple and Findev go up and down completely randomly.
Pair Corralation between Apple and Findev
Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.76 times more return on investment than Findev. However, Apple Inc CDR is 1.32 times less risky than Findev. It trades about 0.11 of its potential returns per unit of risk. Findev Inc is currently generating about 0.06 per unit of risk. If you would invest 2,860 in Apple Inc CDR on September 1, 2024 and sell it today you would earn a total of 615.00 from holding Apple Inc CDR or generate 21.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Apple Inc CDR vs. Findev Inc
Performance |
| Timeline |
| Apple Inc CDR |
| Findev Inc |
Apple and Findev Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Findev
The main advantage of trading using opposite Apple and Findev positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Findev 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 Findev will offset losses from the drop in Findev's long position.The idea behind Apple Inc CDR and Findev 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.| Findev vs. Timbercreek Financial Corp | Findev vs. Firm Capital Mortgage | Findev vs. MCAN Mortgage | Findev vs. First National Financial |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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