Correlation Between Apple and Nel ASA
Can any of the company-specific risk be diversified away by investing in both Apple and Nel ASA 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 Nel ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Nel ASA, you can compare the effects of market volatilities on Apple and Nel ASA 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 Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Nel ASA.
Diversification Opportunities for Apple and Nel ASA
Very good diversification
The 3 months correlation between Apple and Nel is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA 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 Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of Apple i.e., Apple and Nel ASA go up and down completely randomly.
Pair Corralation between Apple and Nel ASA
Given the investment horizon of 90 days Apple Inc is expected to generate 0.26 times more return on investment than Nel ASA. However, Apple Inc is 3.81 times less risky than Nel ASA. It trades about -0.07 of its potential returns per unit of risk. Nel ASA is currently generating about -0.08 per unit of risk. If you would invest 24,336 in Apple Inc on November 4, 2024 and sell it today you would lose (736.00) from holding Apple Inc or give up 3.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Apple Inc vs. Nel ASA
Performance |
| Timeline |
| Apple Inc |
| Nel ASA |
Apple and Nel ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Nel ASA
The main advantage of trading using opposite Apple and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA's long position.The idea behind Apple Inc and Nel ASA 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.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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