Correlation Between Apple and SOS
Can any of the company-specific risk be diversified away by investing in both Apple and SOS 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 SOS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and SOS LTD A, you can compare the effects of market volatilities on Apple and SOS 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 SOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and SOS.
Diversification Opportunities for Apple and SOS
Excellent diversification
The 3 months correlation between Apple and SOS is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SOS LTD A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOS LTD A 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 SOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOS LTD A has no effect on the direction of Apple i.e., Apple and SOS go up and down completely randomly.
Pair Corralation between Apple and SOS
Assuming the 90 days trading horizon Apple Inc is expected to under-perform the SOS. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 2.95 times less risky than SOS. The stock trades about -0.24 of its potential returns per unit of risk. The SOS LTD A is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 660.00 in SOS LTD A on October 20, 2024 and sell it today you would earn a total of 40.00 from holding SOS LTD A or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 88.89% |
| Values | Daily Returns |
Apple Inc vs. SOS LTD A
Performance |
| Timeline |
| Apple Inc |
| SOS LTD A |
Apple and SOS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and SOS
The main advantage of trading using opposite Apple and SOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, SOS 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 SOS will offset losses from the drop in SOS's long position.| Apple vs. HAVERTY FURNITURE A | Apple vs. Focus Home Interactive | Apple vs. Insurance Australia Group | Apple vs. REVO INSURANCE SPA |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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