Correlation Between Apple and Embracer Group
Can any of the company-specific risk be diversified away by investing in both Apple and Embracer Group 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 Embracer Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Embracer Group AB, you can compare the effects of market volatilities on Apple and Embracer Group 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 Embracer Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Embracer Group.
Diversification Opportunities for Apple and Embracer Group
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apple and Embracer is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Embracer Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embracer Group AB 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 Embracer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embracer Group AB has no effect on the direction of Apple i.e., Apple and Embracer Group go up and down completely randomly.
Pair Corralation between Apple and Embracer Group
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Embracer Group. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 1.34 times less risky than Embracer Group. The stock trades about -0.08 of its potential returns per unit of risk. The Embracer Group AB is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,653 in Embracer Group AB on November 3, 2024 and sell it today you would earn a total of 177.00 from holding Embracer Group AB or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Embracer Group AB
Performance |
| Timeline |
| Apple Inc |
| Embracer Group AB |
Apple and Embracer Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Embracer Group
The main advantage of trading using opposite Apple and Embracer Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Embracer Group 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 Embracer Group will offset losses from the drop in Embracer Group's long position.The idea behind Apple Inc and Embracer Group AB 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.| Embracer Group vs. Square Enix Holdings | Embracer Group vs. Capcom Co | Embracer Group vs. CD Projekt SA | Embracer Group vs. Sega Sammy Holdings |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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