Correlation Between Apple and GEA GROUP
Can any of the company-specific risk be diversified away by investing in both Apple and GEA GROUP 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 GEA GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and GEA GROUP, you can compare the effects of market volatilities on Apple and GEA GROUP 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 GEA GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and GEA GROUP.
Diversification Opportunities for Apple and GEA GROUP
Poor diversification
The 3 months correlation between Apple and GEA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and GEA GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEA GROUP 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 GEA GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEA GROUP has no effect on the direction of Apple i.e., Apple and GEA GROUP go up and down completely randomly.
Pair Corralation between Apple and GEA GROUP
Assuming the 90 days trading horizon Apple Inc is expected to generate 1.09 times more return on investment than GEA GROUP. However, Apple is 1.09 times more volatile than GEA GROUP. It trades about 0.07 of its potential returns per unit of risk. GEA GROUP is currently generating about 0.03 per unit of risk. If you would invest 15,626 in Apple Inc on August 29, 2024 and sell it today you would earn a total of 6,779 from holding Apple Inc or generate 43.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. GEA GROUP
Performance |
| Timeline |
| Apple Inc |
| GEA GROUP |
Apple and GEA GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and GEA GROUP
The main advantage of trading using opposite Apple and GEA GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, GEA GROUP 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 GEA GROUP will offset losses from the drop in GEA GROUP's long position.| Apple vs. Cass Information Systems | Apple vs. Hyrican Informationssysteme Aktiengesellschaft | Apple vs. PUBLIC STORAGE PRFO | Apple vs. DOCDATA |
| GEA GROUP vs. Superior Plus Corp | GEA GROUP vs. NMI Holdings | GEA GROUP vs. Origin Agritech | GEA GROUP vs. SIVERS SEMICONDUCTORS AB |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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