Correlation Between Apple and NEXANS ADR
Can any of the company-specific risk be diversified away by investing in both Apple and NEXANS ADR 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 NEXANS ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and NEXANS ADR EO, you can compare the effects of market volatilities on Apple and NEXANS ADR 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 NEXANS ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and NEXANS ADR.
Diversification Opportunities for Apple and NEXANS ADR
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and NEXANS is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and NEXANS ADR EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXANS ADR EO 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 NEXANS ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXANS ADR EO has no effect on the direction of Apple i.e., Apple and NEXANS ADR go up and down completely randomly.
Pair Corralation between Apple and NEXANS ADR
Given the investment horizon of 90 days Apple Inc is expected to under-perform the NEXANS ADR. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 2.01 times less risky than NEXANS ADR. The stock trades about -0.46 of its potential returns per unit of risk. The NEXANS ADR EO is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 5,050 in NEXANS ADR EO on October 23, 2024 and sell it today you would lose (370.00) from holding NEXANS ADR EO or give up 7.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 89.47% |
| Values | Daily Returns |
Apple Inc vs. NEXANS ADR EO
Performance |
| Timeline |
| Apple Inc |
| NEXANS ADR EO |
Apple and NEXANS ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and NEXANS ADR
The main advantage of trading using opposite Apple and NEXANS ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, NEXANS ADR 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 NEXANS ADR will offset losses from the drop in NEXANS ADR's long position.The idea behind Apple Inc and NEXANS ADR EO 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.| NEXANS ADR vs. Autohome ADR | NEXANS ADR vs. Wyndham Hotels Resorts | NEXANS ADR vs. Park Hotels Resorts | NEXANS ADR vs. HOME DEPOT |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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