Correlation Between Apple and CN MODERN
Can any of the company-specific risk be diversified away by investing in both Apple and CN MODERN 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 CN MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and CN MODERN DAIRY, you can compare the effects of market volatilities on Apple and CN MODERN 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 CN MODERN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and CN MODERN.
Diversification Opportunities for Apple and CN MODERN
Very weak diversification
The 3 months correlation between Apple and 07M is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and CN MODERN DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN MODERN DAIRY 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 CN MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN MODERN DAIRY has no effect on the direction of Apple i.e., Apple and CN MODERN go up and down completely randomly.
Pair Corralation between Apple and CN MODERN
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.62 times more return on investment than CN MODERN. However, Apple Inc is 1.6 times less risky than CN MODERN. It trades about 0.08 of its potential returns per unit of risk. CN MODERN DAIRY is currently generating about 0.03 per unit of risk. If you would invest 16,184 in Apple Inc on August 25, 2024 and sell it today you would earn a total of 5,666 from holding Apple Inc or generate 35.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. CN MODERN DAIRY
Performance |
| Timeline |
| Apple Inc |
| CN MODERN DAIRY |
Apple and CN MODERN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and CN MODERN
The main advantage of trading using opposite Apple and CN MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, CN MODERN 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 CN MODERN will offset losses from the drop in CN MODERN's long position.| Apple vs. INFORMATION SVC GRP | Apple vs. DATANG INTL POW | Apple vs. JIAHUA STORES | Apple vs. Qurate Retail Series |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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