Correlation Between Apple and Xiaomi Corp
Can any of the company-specific risk be diversified away by investing in both Apple and Xiaomi Corp 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 Xiaomi Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Xiaomi Corp, you can compare the effects of market volatilities on Apple and Xiaomi Corp 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 Xiaomi Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Xiaomi Corp.
Diversification Opportunities for Apple and Xiaomi Corp
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Apple and Xiaomi is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Xiaomi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiaomi Corp 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 Xiaomi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiaomi Corp has no effect on the direction of Apple i.e., Apple and Xiaomi Corp go up and down completely randomly.
Pair Corralation between Apple and Xiaomi Corp
Given the investment horizon of 90 days Apple is expected to generate 3.44 times less return on investment than Xiaomi Corp. But when comparing it to its historical volatility, Apple Inc is 2.01 times less risky than Xiaomi Corp. It trades about 0.09 of its potential returns per unit of risk. Xiaomi Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 164.00 in Xiaomi Corp on August 28, 2024 and sell it today you would earn a total of 202.00 from holding Xiaomi Corp or generate 123.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Apple Inc vs. Xiaomi Corp
Performance |
| Timeline |
| Apple Inc |
| Xiaomi Corp |
Apple and Xiaomi Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Xiaomi Corp
The main advantage of trading using opposite Apple and Xiaomi Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Xiaomi Corp 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 Xiaomi Corp will offset losses from the drop in Xiaomi Corp's long position.The idea behind Apple Inc and Xiaomi Corp 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.| Xiaomi Corp vs. Zepp Health Corp | Xiaomi Corp vs. Samsung Electronics Co | Xiaomi Corp vs. LG Display Co | Xiaomi Corp vs. Sharp |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |