Correlation Between Apple and TELE2 B
Can any of the company-specific risk be diversified away by investing in both Apple and TELE2 B 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 TELE2 B into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and TELE2 B , you can compare the effects of market volatilities on Apple and TELE2 B 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 TELE2 B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and TELE2 B.
Diversification Opportunities for Apple and TELE2 B
Poor diversification
The 3 months correlation between Apple and TELE2 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and TELE2 B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELE2 B 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 TELE2 B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELE2 B has no effect on the direction of Apple i.e., Apple and TELE2 B go up and down completely randomly.
Pair Corralation between Apple and TELE2 B
Assuming the 90 days trading horizon Apple Inc is expected to generate 1.36 times more return on investment than TELE2 B. However, Apple is 1.36 times more volatile than TELE2 B . It trades about 0.68 of its potential returns per unit of risk. TELE2 B is currently generating about 0.15 per unit of risk. If you would invest 21,370 in Apple Inc on September 19, 2024 and sell it today you would earn a total of 2,685 from holding Apple Inc or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. TELE2 B
Performance |
| Timeline |
| Apple Inc |
| TELE2 B |
Apple and TELE2 B Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and TELE2 B
The main advantage of trading using opposite Apple and TELE2 B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, TELE2 B 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 TELE2 B will offset losses from the drop in TELE2 B's long position.The idea behind Apple Inc and TELE2 B 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.| TELE2 B vs. UNITED RENTALS | TELE2 B vs. JLF INVESTMENT | TELE2 B vs. Air Lease | TELE2 B vs. AIR PRODCHEMICALS |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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