Correlation Between Apple and New Tech
Can any of the company-specific risk be diversified away by investing in both Apple and New Tech 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 New Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and New Tech Venture, you can compare the effects of market volatilities on Apple and New Tech 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 New Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and New Tech.
Diversification Opportunities for Apple and New Tech
Very good diversification
The 3 months correlation between Apple and New is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and New Tech Venture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Tech Venture 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 New Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Tech Venture has no effect on the direction of Apple i.e., Apple and New Tech go up and down completely randomly.
Pair Corralation between Apple and New Tech
Given the investment horizon of 90 days Apple Inc is expected to generate 0.33 times more return on investment than New Tech. However, Apple Inc is 3.06 times less risky than New Tech. It trades about 0.1 of its potential returns per unit of risk. New Tech Venture is currently generating about 0.0 per unit of risk. If you would invest 18,174 in Apple Inc on November 3, 2024 and sell it today you would earn a total of 5,426 from holding Apple Inc or generate 29.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 74.73% |
| Values | Daily Returns |
Apple Inc vs. New Tech Venture
Performance |
| Timeline |
| Apple Inc |
| New Tech Venture |
Apple and New Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and New Tech
The main advantage of trading using opposite Apple and New Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, New Tech 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 New Tech will offset losses from the drop in New Tech's long position.The idea behind Apple Inc and New Tech Venture 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.| New Tech vs. Asseco Business Solutions | New Tech vs. Detalion Games SA | New Tech vs. Movie Games SA | New Tech vs. Altustfi |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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