Correlation Between Apple and APERAM REG
Can any of the company-specific risk be diversified away by investing in both Apple and APERAM REG 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 APERAM REG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and APERAM REG, you can compare the effects of market volatilities on Apple and APERAM REG 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 APERAM REG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and APERAM REG.
Diversification Opportunities for Apple and APERAM REG
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and APERAM is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and APERAM REG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APERAM REG 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 APERAM REG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APERAM REG has no effect on the direction of Apple i.e., Apple and APERAM REG go up and down completely randomly.
Pair Corralation between Apple and APERAM REG
Assuming the 90 days trading horizon Apple is expected to generate 1.27 times less return on investment than APERAM REG. But when comparing it to its historical volatility, Apple Inc is 1.11 times less risky than APERAM REG. It trades about 0.08 of its potential returns per unit of risk. APERAM REG is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,525 in APERAM REG on August 28, 2024 and sell it today you would earn a total of 249.00 from holding APERAM REG or generate 9.86% 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. APERAM REG
Performance |
| Timeline |
| Apple Inc |
| APERAM REG |
Apple and APERAM REG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and APERAM REG
The main advantage of trading using opposite Apple and APERAM REG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, APERAM REG 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 APERAM REG will offset losses from the drop in APERAM REG's long position.| Apple vs. Penn National Gaming | Apple vs. Fast Retailing Co | Apple vs. Hochschild Mining plc | Apple vs. AUTO TRADER ADR |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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