Correlation Between Apple and Datang International
Can any of the company-specific risk be diversified away by investing in both Apple and Datang International 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 Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Datang International Power, you can compare the effects of market volatilities on Apple and Datang International 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 Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Datang International.
Diversification Opportunities for Apple and Datang International
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Apple and Datang is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International 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 Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of Apple i.e., Apple and Datang International go up and down completely randomly.
Pair Corralation between Apple and Datang International
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.47 times more return on investment than Datang International. However, Apple Inc is 2.14 times less risky than Datang International. It trades about 0.13 of its potential returns per unit of risk. Datang International Power is currently generating about -0.01 per unit of risk. If you would invest 17,736 in Apple Inc on September 2, 2024 and sell it today you would earn a total of 4,659 from holding Apple Inc or generate 26.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Datang International Power
Performance |
| Timeline |
| Apple Inc |
| Datang International |
Apple and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Datang International
The main advantage of trading using opposite Apple and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Datang International 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 Datang International will offset losses from the drop in Datang International's long position.The idea behind Apple Inc and Datang International Power 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.| Datang International vs. Superior Plus Corp | Datang International vs. NMI Holdings | Datang International vs. Origin Agritech | Datang International vs. SIVERS SEMICONDUCTORS AB |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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