Correlation Between Apple and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Apple and XLMedia PLC 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 XLMedia PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and XLMedia PLC, you can compare the effects of market volatilities on Apple and XLMedia PLC 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and XLMedia PLC.
Diversification Opportunities for Apple and XLMedia PLC
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and XLMedia is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Apple i.e., Apple and XLMedia PLC go up and down completely randomly.
Pair Corralation between Apple and XLMedia PLC
Given the investment horizon of 90 days Apple Inc is expected to under-perform the XLMedia PLC. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 3.04 times less risky than XLMedia PLC. The stock trades about -0.08 of its potential returns per unit of risk. The XLMedia PLC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 9.90 in XLMedia PLC on November 3, 2024 and sell it today you would earn a total of 2.10 from holding XLMedia PLC or generate 21.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Apple Inc vs. XLMedia PLC
Performance |
| Timeline |
| Apple Inc |
| XLMedia PLC |
Apple and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and XLMedia PLC
The main advantage of trading using opposite Apple and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.The idea behind Apple Inc and XLMedia PLC 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.| XLMedia PLC vs. TROPHY GAMES DEV | XLMedia PLC vs. Scientific Games | XLMedia PLC vs. DETALION GAMES SA | XLMedia PLC vs. FIRST SHIP LEASE |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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