Correlation Between Apple and CEOTRONICS
Can any of the company-specific risk be diversified away by investing in both Apple and CEOTRONICS 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 CEOTRONICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and CEOTRONICS, you can compare the effects of market volatilities on Apple and CEOTRONICS 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 CEOTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and CEOTRONICS.
Diversification Opportunities for Apple and CEOTRONICS
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and CEOTRONICS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS 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 CEOTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS has no effect on the direction of Apple i.e., Apple and CEOTRONICS go up and down completely randomly.
Pair Corralation between Apple and CEOTRONICS
Assuming the 90 days trading horizon Apple is expected to generate 1.31 times less return on investment than CEOTRONICS. But when comparing it to its historical volatility, Apple Inc is 6.76 times less risky than CEOTRONICS. It trades about 0.76 of its potential returns per unit of risk. CEOTRONICS is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 555.00 in CEOTRONICS on September 13, 2024 and sell it today you would earn a total of 75.00 from holding CEOTRONICS or generate 13.51% 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. CEOTRONICS
Performance |
| Timeline |
| Apple Inc |
| CEOTRONICS |
Apple and CEOTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and CEOTRONICS
The main advantage of trading using opposite Apple and CEOTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, CEOTRONICS 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 CEOTRONICS will offset losses from the drop in CEOTRONICS's long position.| Apple vs. Spirent Communications plc | Apple vs. Evolution Mining Limited | Apple vs. CHINA TELECOM H | Apple vs. Harmony Gold Mining |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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