Correlation Between Apple and Australian Unity
Can any of the company-specific risk be diversified away by investing in both Apple and Australian Unity 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 Australian Unity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Australian Unity Ltd, you can compare the effects of market volatilities on Apple and Australian Unity 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 Australian Unity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Australian Unity.
Diversification Opportunities for Apple and Australian Unity
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and Australian is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Australian Unity Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity 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 Australian Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity has no effect on the direction of Apple i.e., Apple and Australian Unity go up and down completely randomly.
Pair Corralation between Apple and Australian Unity
Given the investment horizon of 90 days Apple Inc is expected to generate 1.78 times more return on investment than Australian Unity. However, Apple is 1.78 times more volatile than Australian Unity Ltd. It trades about 0.07 of its potential returns per unit of risk. Australian Unity Ltd is currently generating about 0.01 per unit of risk. If you would invest 18,849 in Apple Inc on November 3, 2024 and sell it today you would earn a total of 4,751 from holding Apple Inc or generate 25.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Apple Inc vs. Australian Unity Ltd
Performance |
| Timeline |
| Apple Inc |
| Australian Unity |
Apple and Australian Unity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Australian Unity
The main advantage of trading using opposite Apple and Australian Unity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Australian Unity 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 Australian Unity will offset losses from the drop in Australian Unity's long position.The idea behind Apple Inc and Australian Unity Ltd 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.| Australian Unity vs. COAST ENTERTAINMENT HOLDINGS | Australian Unity vs. Retail Food Group | Australian Unity vs. Southern Cross Media | Australian Unity vs. Sports Entertainment Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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