Correlation Between Apple and Baywa AG

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Can any of the company-specific risk be diversified away by investing in both Apple and Baywa AG 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 Baywa AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Baywa AG Vink, you can compare the effects of market volatilities on Apple and Baywa AG 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 Baywa AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Baywa AG.

Diversification Opportunities for Apple and Baywa AG

-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Apple and Baywa is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Baywa AG Vink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baywa AG Vink 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 Baywa AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baywa AG Vink has no effect on the direction of Apple i.e., Apple and Baywa AG go up and down completely randomly.

Pair Corralation between Apple and Baywa AG

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.19 times more return on investment than Baywa AG. However, Apple Inc is 5.29 times less risky than Baywa AG. It trades about 0.65 of its potential returns per unit of risk. Baywa AG Vink is currently generating about 0.08 per unit of risk. If you would invest  20,940  in Apple Inc on September 12, 2024 and sell it today you would earn a total of  2,670  from holding Apple Inc or generate 12.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Baywa AG Vink

 Performance 
       Timeline  
Apple Inc 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.
Baywa AG Vink 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Baywa AG Vink has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Apple and Baywa AG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Baywa AG

The main advantage of trading using opposite Apple and Baywa AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Baywa AG 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 Baywa AG will offset losses from the drop in Baywa AG's long position.
The idea behind Apple Inc and Baywa AG Vink 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.
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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