Correlation Between Apple and SYSTEMAIR
Can any of the company-specific risk be diversified away by investing in both Apple and SYSTEMAIR 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 SYSTEMAIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and SYSTEMAIR AB, you can compare the effects of market volatilities on Apple and SYSTEMAIR 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 SYSTEMAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and SYSTEMAIR.
Diversification Opportunities for Apple and SYSTEMAIR
Average diversification
The 3 months correlation between Apple and SYSTEMAIR is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB 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 SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of Apple i.e., Apple and SYSTEMAIR go up and down completely randomly.
Pair Corralation between Apple and SYSTEMAIR
Assuming the 90 days trading horizon Apple is expected to generate 1.52 times less return on investment than SYSTEMAIR. But when comparing it to its historical volatility, Apple Inc is 2.06 times less risky than SYSTEMAIR. It trades about 0.07 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 434.00 in SYSTEMAIR AB on August 26, 2024 and sell it today you would earn a total of 337.00 from holding SYSTEMAIR AB or generate 77.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. SYSTEMAIR AB
Performance |
| Timeline |
| Apple Inc |
| SYSTEMAIR AB |
Apple and SYSTEMAIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and SYSTEMAIR
The main advantage of trading using opposite Apple and SYSTEMAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, SYSTEMAIR 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 SYSTEMAIR will offset losses from the drop in SYSTEMAIR's long position.| Apple vs. AWILCO DRILLING PLC | Apple vs. NIPPON STEEL SPADR | Apple vs. GEELY AUTOMOBILE | Apple vs. LEGACY IRON ORE |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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