Correlation Between Apple and SAFETY MEDICAL
Can any of the company-specific risk be diversified away by investing in both Apple and SAFETY MEDICAL 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 SAFETY MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and SAFETY MEDICAL PROD, you can compare the effects of market volatilities on Apple and SAFETY MEDICAL 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 SAFETY MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and SAFETY MEDICAL.
Diversification Opportunities for Apple and SAFETY MEDICAL
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and SAFETY is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SAFETY MEDICAL PROD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAFETY MEDICAL PROD 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 SAFETY MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAFETY MEDICAL PROD has no effect on the direction of Apple i.e., Apple and SAFETY MEDICAL go up and down completely randomly.
Pair Corralation between Apple and SAFETY MEDICAL
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.49 times more return on investment than SAFETY MEDICAL. However, Apple Inc is 2.05 times less risky than SAFETY MEDICAL. It trades about 0.05 of its potential returns per unit of risk. SAFETY MEDICAL PROD is currently generating about -0.07 per unit of risk. If you would invest 17,419 in Apple Inc on August 28, 2024 and sell it today you would earn a total of 4,666 from holding Apple Inc or generate 26.79% 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. SAFETY MEDICAL PROD
Performance |
| Timeline |
| Apple Inc |
| SAFETY MEDICAL PROD |
Apple and SAFETY MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and SAFETY MEDICAL
The main advantage of trading using opposite Apple and SAFETY MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, SAFETY MEDICAL 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 SAFETY MEDICAL will offset losses from the drop in SAFETY MEDICAL's long position.| Apple vs. Treasury Wine Estates | Apple vs. Daito Trust Construction | Apple vs. Granite Construction | Apple vs. TITAN MACHINERY |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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