Correlation Between Apple and SHIN ETSU
Can any of the company-specific risk be diversified away by investing in both Apple and SHIN ETSU 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 SHIN ETSU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and SHIN ETSU CHEMICAL, you can compare the effects of market volatilities on Apple and SHIN ETSU 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 SHIN ETSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and SHIN ETSU.
Diversification Opportunities for Apple and SHIN ETSU
Very good diversification
The 3 months correlation between Apple and SHIN is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SHIN ETSU CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIN ETSU CHEMICAL 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 SHIN ETSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIN ETSU CHEMICAL has no effect on the direction of Apple i.e., Apple and SHIN ETSU go up and down completely randomly.
Pair Corralation between Apple and SHIN ETSU
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.59 times more return on investment than SHIN ETSU. However, Apple Inc is 1.69 times less risky than SHIN ETSU. It trades about 0.13 of its potential returns per unit of risk. SHIN ETSU CHEMICAL is currently generating about 0.02 per unit of risk. If you would invest 17,527 in Apple Inc on August 29, 2024 and sell it today you would earn a total of 4,698 from holding Apple Inc or generate 26.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. SHIN ETSU CHEMICAL
Performance |
| Timeline |
| Apple Inc |
| SHIN ETSU CHEMICAL |
Apple and SHIN ETSU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and SHIN ETSU
The main advantage of trading using opposite Apple and SHIN ETSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, SHIN ETSU 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 SHIN ETSU will offset losses from the drop in SHIN ETSU's long position.| Apple vs. Cellnex Telecom SA | Apple vs. Spirent Communications plc | Apple vs. Ribbon Communications | Apple vs. Perseus Mining Limited |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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