Correlation Between Apple and Pacific Basin
Can any of the company-specific risk be diversified away by investing in both Apple and Pacific Basin 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 Pacific Basin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Pacific Basin Shipping, you can compare the effects of market volatilities on Apple and Pacific Basin 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 Pacific Basin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Pacific Basin.
Diversification Opportunities for Apple and Pacific Basin
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Apple and Pacific is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Pacific Basin Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Basin Shipping 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 Pacific Basin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Basin Shipping has no effect on the direction of Apple i.e., Apple and Pacific Basin go up and down completely randomly.
Pair Corralation between Apple and Pacific Basin
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Pacific Basin. In addition to that, Apple is 1.37 times more volatile than Pacific Basin Shipping. It trades about -0.27 of its total potential returns per unit of risk. Pacific Basin Shipping is currently generating about -0.23 per unit of volatility. If you would invest 21.00 in Pacific Basin Shipping on October 20, 2024 and sell it today you would lose (1.00) from holding Pacific Basin Shipping or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Apple Inc vs. Pacific Basin Shipping
Performance |
| Timeline |
| Apple Inc |
| Pacific Basin Shipping |
Apple and Pacific Basin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Pacific Basin
The main advantage of trading using opposite Apple and Pacific Basin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Pacific Basin 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 Pacific Basin will offset losses from the drop in Pacific Basin's long position.| Apple vs. Canon Inc | Apple vs. Artificial Intelligence Technology | Apple vs. Quantum Computing | Apple vs. Ageagle Aerial Systems |
| Pacific Basin vs. American Shipping | Pacific Basin vs. EuroDry | Pacific Basin vs. Nippon Yusen Kabushiki | Pacific Basin vs. Euroseas |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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