Correlation Between Apple and BANK CENTRAL
Can any of the company-specific risk be diversified away by investing in both Apple and BANK CENTRAL 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 BANK CENTRAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and BANK CENTRAL ASIA, you can compare the effects of market volatilities on Apple and BANK CENTRAL 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 BANK CENTRAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and BANK CENTRAL.
Diversification Opportunities for Apple and BANK CENTRAL
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apple and BANK is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and BANK CENTRAL ASIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK CENTRAL ASIA 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 BANK CENTRAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK CENTRAL ASIA has no effect on the direction of Apple i.e., Apple and BANK CENTRAL go up and down completely randomly.
Pair Corralation between Apple and BANK CENTRAL
Assuming the 90 days trading horizon Apple Inc is expected to generate 1.67 times more return on investment than BANK CENTRAL. However, Apple is 1.67 times more volatile than BANK CENTRAL ASIA. It trades about -0.06 of its potential returns per unit of risk. BANK CENTRAL ASIA is currently generating about -0.17 per unit of risk. If you would invest 21,767 in Apple Inc on January 18, 2025 and sell it today you would lose (4,465) from holding Apple Inc or give up 20.51% 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. BANK CENTRAL ASIA
Performance |
| Timeline |
| Apple Inc |
| BANK CENTRAL ASIA |
Apple and BANK CENTRAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and BANK CENTRAL
The main advantage of trading using opposite Apple and BANK CENTRAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, BANK CENTRAL 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 BANK CENTRAL will offset losses from the drop in BANK CENTRAL's long position.| Apple vs. Chuangs China Investments | Apple vs. CI GAMES SA | Apple vs. OURGAME INTHOLDL 00005 | Apple vs. HK Electric Investments |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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