Correlation Between Apple and Chiba Bank
Can any of the company-specific risk be diversified away by investing in both Apple and Chiba Bank 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 Chiba Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Chiba Bank, you can compare the effects of market volatilities on Apple and Chiba Bank 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 Chiba Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Chiba Bank.
Diversification Opportunities for Apple and Chiba Bank
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and Chiba is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Chiba Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiba Bank 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 Chiba Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiba Bank has no effect on the direction of Apple i.e., Apple and Chiba Bank go up and down completely randomly.
Pair Corralation between Apple and Chiba Bank
Assuming the 90 days trading horizon Apple is expected to generate 5.71 times less return on investment than Chiba Bank. But when comparing it to its historical volatility, Apple Inc is 1.5 times less risky than Chiba Bank. It trades about 0.05 of its potential returns per unit of risk. Chiba Bank is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 665.00 in Chiba Bank on August 24, 2024 and sell it today you would earn a total of 50.00 from holding Chiba Bank or generate 7.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Apple Inc vs. Chiba Bank
Performance |
| Timeline |
| Apple Inc |
| Chiba Bank |
Apple and Chiba Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Chiba Bank
The main advantage of trading using opposite Apple and Chiba Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Chiba Bank 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 Chiba Bank will offset losses from the drop in Chiba Bank's long position.| Apple vs. INFORMATION SVC GRP | Apple vs. DATANG INTL POW | Apple vs. JIAHUA STORES | Apple vs. Qurate Retail Series |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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