Correlation Between Apple and AUST AGRICULTURAL
Can any of the company-specific risk be diversified away by investing in both Apple and AUST AGRICULTURAL 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 AUST AGRICULTURAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and AUST AGRICULTURAL, you can compare the effects of market volatilities on Apple and AUST AGRICULTURAL 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 AUST AGRICULTURAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and AUST AGRICULTURAL.
Diversification Opportunities for Apple and AUST AGRICULTURAL
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Apple and AUST is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and AUST AGRICULTURAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUST AGRICULTURAL 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 AUST AGRICULTURAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUST AGRICULTURAL has no effect on the direction of Apple i.e., Apple and AUST AGRICULTURAL go up and down completely randomly.
Pair Corralation between Apple and AUST AGRICULTURAL
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.97 times more return on investment than AUST AGRICULTURAL. However, Apple Inc is 1.03 times less risky than AUST AGRICULTURAL. It trades about 0.08 of its potential returns per unit of risk. AUST AGRICULTURAL is currently generating about 0.01 per unit of risk. If you would invest 17,366 in Apple Inc on August 29, 2024 and sell it today you would earn a total of 5,039 from holding Apple Inc or generate 29.02% 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. AUST AGRICULTURAL
Performance |
| Timeline |
| Apple Inc |
| AUST AGRICULTURAL |
Apple and AUST AGRICULTURAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and AUST AGRICULTURAL
The main advantage of trading using opposite Apple and AUST AGRICULTURAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, AUST AGRICULTURAL 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 AUST AGRICULTURAL will offset losses from the drop in AUST AGRICULTURAL's long position.| Apple vs. Tsingtao Brewery | Apple vs. United Rentals | Apple vs. ALBIS LEASING AG | Apple vs. Lendlease Group |
| AUST AGRICULTURAL vs. Astral Foods Limited | AUST AGRICULTURAL vs. Food Life Companies | AUST AGRICULTURAL vs. Gol Intelligent Airlines | AUST AGRICULTURAL vs. Charoen Pokphand Foods |
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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