Correlation Between Apple and Altech Batteries
Can any of the company-specific risk be diversified away by investing in both Apple and Altech Batteries 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 Altech Batteries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Altech Batteries Limited, you can compare the effects of market volatilities on Apple and Altech Batteries 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 Altech Batteries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Altech Batteries.
Diversification Opportunities for Apple and Altech Batteries
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Apple and Altech is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Altech Batteries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altech Batteries 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 Altech Batteries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altech Batteries has no effect on the direction of Apple i.e., Apple and Altech Batteries go up and down completely randomly.
Pair Corralation between Apple and Altech Batteries
Given the investment horizon of 90 days Apple Inc is expected to generate 0.17 times more return on investment than Altech Batteries. However, Apple Inc is 5.92 times less risky than Altech Batteries. It trades about 0.11 of its potential returns per unit of risk. Altech Batteries Limited is currently generating about -0.02 per unit of risk. If you would invest 22,985 in Apple Inc on August 31, 2024 and sell it today you would earn a total of 508.00 from holding Apple Inc or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Altech Batteries Limited
Performance |
| Timeline |
| Apple Inc |
| Altech Batteries |
Apple and Altech Batteries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Altech Batteries
The main advantage of trading using opposite Apple and Altech Batteries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Altech Batteries 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 Altech Batteries will offset losses from the drop in Altech Batteries' long position.The idea behind Apple Inc and Altech Batteries Limited 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.| Altech Batteries vs. Amgen Inc | Altech Batteries vs. Lifevantage | Altech Batteries vs. Tandem Diabetes Care | Altech Batteries vs. FitLife Brands, Common |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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