Correlation Between Apple and Xavis
Can any of the company-specific risk be diversified away by investing in both Apple and Xavis 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 Xavis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Xavis Co, you can compare the effects of market volatilities on Apple and Xavis 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 Xavis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Xavis.
Diversification Opportunities for Apple and Xavis
Excellent diversification
The 3 months correlation between Apple and Xavis is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis 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 are associated (or correlated) with Xavis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xavis has no effect on the direction of Apple i.e., Apple and Xavis go up and down completely randomly.
Pair Corralation between Apple and Xavis
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Xavis. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 1.26 times less risky than Xavis. The stock trades about -0.08 of its potential returns per unit of risk. The Xavis Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 129,700 in Xavis Co on November 3, 2024 and sell it today you would earn a total of 13,300 from holding Xavis Co or generate 10.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Apple Inc vs. Xavis Co
Performance |
| Timeline |
| Apple Inc |
| Xavis |
Apple and Xavis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Xavis
The main advantage of trading using opposite Apple and Xavis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Xavis 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 Xavis will offset losses from the drop in Xavis' long position.The idea behind Apple Inc and Xavis Co 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.| Xavis vs. Kukdong Oil Chemicals | Xavis vs. LG Display Co | Xavis vs. Digital Power Communications | Xavis vs. Alton Sports CoLtd |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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