Correlation Between Apple and GUDANG GARAM
Can any of the company-specific risk be diversified away by investing in both Apple and GUDANG GARAM 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 GUDANG GARAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and GUDANG GARAM, you can compare the effects of market volatilities on Apple and GUDANG GARAM 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 GUDANG GARAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and GUDANG GARAM.
Diversification Opportunities for Apple and GUDANG GARAM
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and GUDANG is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and GUDANG GARAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUDANG GARAM 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 GUDANG GARAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUDANG GARAM has no effect on the direction of Apple i.e., Apple and GUDANG GARAM go up and down completely randomly.
Pair Corralation between Apple and GUDANG GARAM
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.78 times more return on investment than GUDANG GARAM. However, Apple Inc is 1.29 times less risky than GUDANG GARAM. It trades about -0.43 of its potential returns per unit of risk. GUDANG GARAM is currently generating about -0.39 per unit of risk. If you would invest 23,670 in Apple Inc on December 25, 2024 and sell it today you would lose (3,385) from holding Apple Inc or give up 14.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. GUDANG GARAM
Performance |
| Timeline |
| Apple Inc |
| GUDANG GARAM |
Apple and GUDANG GARAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and GUDANG GARAM
The main advantage of trading using opposite Apple and GUDANG GARAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, GUDANG GARAM 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 GUDANG GARAM will offset losses from the drop in GUDANG GARAM's long position.| Apple vs. FUYO GENERAL LEASE | Apple vs. East Africa Metals | Apple vs. LI METAL P | Apple vs. Yuexiu Transport Infrastructure |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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