Correlation Between Apple and Zhejiang Expressway
Can any of the company-specific risk be diversified away by investing in both Apple and Zhejiang Expressway 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 Zhejiang Expressway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Zhejiang Expressway Co, you can compare the effects of market volatilities on Apple and Zhejiang Expressway 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 Zhejiang Expressway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Zhejiang Expressway.
Diversification Opportunities for Apple and Zhejiang Expressway
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and Zhejiang is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Zhejiang Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Expressway 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 Zhejiang Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Expressway has no effect on the direction of Apple i.e., Apple and Zhejiang Expressway go up and down completely randomly.
Pair Corralation between Apple and Zhejiang Expressway
Assuming the 90 days trading horizon Apple is expected to generate 3.68 times less return on investment than Zhejiang Expressway. But when comparing it to its historical volatility, Apple Inc is 5.68 times less risky than Zhejiang Expressway. It trades about 0.1 of its potential returns per unit of risk. Zhejiang Expressway Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Zhejiang Expressway Co on August 31, 2024 and sell it today you would earn a total of 46.00 from holding Zhejiang Expressway Co or generate 328.57% 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. Zhejiang Expressway Co
Performance |
| Timeline |
| Apple Inc |
| Zhejiang Expressway |
Apple and Zhejiang Expressway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Zhejiang Expressway
The main advantage of trading using opposite Apple and Zhejiang Expressway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Zhejiang Expressway 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 Zhejiang Expressway will offset losses from the drop in Zhejiang Expressway's long position.| Apple vs. NTG Nordic Transport | Apple vs. COPLAND ROAD CAPITAL | Apple vs. SBA Communications Corp | Apple vs. T Mobile |
| Zhejiang Expressway vs. Playtech plc | Zhejiang Expressway vs. GigaMedia | Zhejiang Expressway vs. Harmony Gold Mining | Zhejiang Expressway vs. Perseus Mining Limited |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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