Correlation Between Apple and PT Bank
Can any of the company-specific risk be diversified away by investing in both Apple and PT 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 PT 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 PT Bank Rakyat, you can compare the effects of market volatilities on Apple and PT 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 PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and PT Bank.
Diversification Opportunities for Apple and PT Bank
Excellent diversification
The 3 months correlation between Apple and BYRA is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of Apple i.e., Apple and PT Bank go up and down completely randomly.
Pair Corralation between Apple and PT Bank
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.12 times more return on investment than PT Bank. However, Apple Inc is 8.53 times less risky than PT Bank. It trades about 0.54 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about -0.11 per unit of risk. If you would invest 21,820 in Apple Inc on September 22, 2024 and sell it today you would earn a total of 2,330 from holding Apple Inc or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. PT Bank Rakyat
Performance |
| Timeline |
| Apple Inc |
| PT Bank Rakyat |
Apple and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and PT Bank
The main advantage of trading using opposite Apple and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, PT 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 PT Bank will offset losses from the drop in PT Bank's long position.| Apple vs. Games Workshop Group | Apple vs. Sumitomo Mitsui Construction | Apple vs. DAIRY FARM INTL | Apple vs. Federal Agricultural Mortgage |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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