Correlation Between Apple and Next Hydrogen
Can any of the company-specific risk be diversified away by investing in both Apple and Next Hydrogen 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 Next Hydrogen 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 Next Hydrogen Solutions, you can compare the effects of market volatilities on Apple and Next Hydrogen 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 Next Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Next Hydrogen.
Diversification Opportunities for Apple and Next Hydrogen
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Apple and Next is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Next Hydrogen Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Hydrogen Solutions 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 Next Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Hydrogen Solutions has no effect on the direction of Apple i.e., Apple and Next Hydrogen go up and down completely randomly.
Pair Corralation between Apple and Next Hydrogen
Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.24 times more return on investment than Next Hydrogen. However, Apple Inc CDR is 4.12 times less risky than Next Hydrogen. It trades about 0.07 of its potential returns per unit of risk. Next Hydrogen Solutions is currently generating about 0.0 per unit of risk. If you would invest 2,136 in Apple Inc CDR on August 27, 2024 and sell it today you would earn a total of 1,232 from holding Apple Inc CDR or generate 57.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc CDR vs. Next Hydrogen Solutions
Performance |
| Timeline |
| Apple Inc CDR |
| Next Hydrogen Solutions |
Apple and Next Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Next Hydrogen
The main advantage of trading using opposite Apple and Next Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Next Hydrogen 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 Next Hydrogen will offset losses from the drop in Next Hydrogen's long position.| Apple vs. Data Communications Management | Apple vs. Toronto Dominion Bank | Apple vs. Firan Technology Group | Apple vs. Algonquin Power Utilities |
| Next Hydrogen vs. Microsoft Corp CDR | Next Hydrogen vs. Apple Inc CDR | Next Hydrogen vs. Alphabet Inc CDR | Next Hydrogen vs. Amazon CDR |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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