Correlation Between Apple and KRAKATAU STEEL
Can any of the company-specific risk be diversified away by investing in both Apple and KRAKATAU STEEL 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 KRAKATAU STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and KRAKATAU STEEL B , you can compare the effects of market volatilities on Apple and KRAKATAU STEEL 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 KRAKATAU STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and KRAKATAU STEEL.
Diversification Opportunities for Apple and KRAKATAU STEEL
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and KRAKATAU is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and KRAKATAU STEEL B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KRAKATAU STEEL B 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 KRAKATAU STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KRAKATAU STEEL B has no effect on the direction of Apple i.e., Apple and KRAKATAU STEEL go up and down completely randomly.
Pair Corralation between Apple and KRAKATAU STEEL
Assuming the 90 days trading horizon Apple is expected to generate 1.1 times less return on investment than KRAKATAU STEEL. But when comparing it to its historical volatility, Apple Inc is 4.62 times less risky than KRAKATAU STEEL. It trades about 0.1 of its potential returns per unit of risk. KRAKATAU STEEL B is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2.75 in KRAKATAU STEEL B on September 13, 2024 and sell it today you would lose (2.15) from holding KRAKATAU STEEL B or give up 78.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Apple Inc vs. KRAKATAU STEEL B
Performance |
| Timeline |
| Apple Inc |
| KRAKATAU STEEL B |
Apple and KRAKATAU STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and KRAKATAU STEEL
The main advantage of trading using opposite Apple and KRAKATAU STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, KRAKATAU STEEL 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 KRAKATAU STEEL will offset losses from the drop in KRAKATAU STEEL's long position.| Apple vs. PLAYSTUDIOS A DL 0001 | Apple vs. Universal Display | Apple vs. PLAYMATES TOYS | Apple vs. Playtech plc |
| KRAKATAU STEEL vs. Apple Inc | KRAKATAU STEEL vs. Apple Inc | KRAKATAU STEEL vs. Apple Inc | KRAKATAU STEEL vs. Apple Inc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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