Correlation Between Apple and DAIRY FARM
Can any of the company-specific risk be diversified away by investing in both Apple and DAIRY FARM 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 DAIRY FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and DAIRY FARM INTL, you can compare the effects of market volatilities on Apple and DAIRY FARM 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 DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and DAIRY FARM.
Diversification Opportunities for Apple and DAIRY FARM
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and DAIRY is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL 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 DAIRY FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIRY FARM INTL has no effect on the direction of Apple i.e., Apple and DAIRY FARM go up and down completely randomly.
Pair Corralation between Apple and DAIRY FARM
Assuming the 90 days trading horizon Apple is expected to generate 2.47 times less return on investment than DAIRY FARM. But when comparing it to its historical volatility, Apple Inc is 1.02 times less risky than DAIRY FARM. It trades about 0.14 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 216.00 in DAIRY FARM INTL on August 25, 2024 and sell it today you would earn a total of 22.00 from holding DAIRY FARM INTL or generate 10.19% 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. DAIRY FARM INTL
Performance |
| Timeline |
| Apple Inc |
| DAIRY FARM INTL |
Apple and DAIRY FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and DAIRY FARM
The main advantage of trading using opposite Apple and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, DAIRY FARM 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 DAIRY FARM will offset losses from the drop in DAIRY FARM's long position.| Apple vs. Perdoceo Education | Apple vs. UNITED UTILITIES GR | Apple vs. Federal Agricultural Mortgage | Apple vs. North American Construction |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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