Correlation Between Apple and EHEALTH
Can any of the company-specific risk be diversified away by investing in both Apple and EHEALTH 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 EHEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and EHEALTH, you can compare the effects of market volatilities on Apple and EHEALTH 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 EHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and EHEALTH.
Diversification Opportunities for Apple and EHEALTH
Poor diversification
The 3 months correlation between Apple and EHEALTH is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH 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 EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of Apple i.e., Apple and EHEALTH go up and down completely randomly.
Pair Corralation between Apple and EHEALTH
Assuming the 90 days trading horizon Apple is expected to generate 3.13 times less return on investment than EHEALTH. But when comparing it to its historical volatility, Apple Inc is 2.72 times less risky than EHEALTH. It trades about 0.11 of its potential returns per unit of risk. EHEALTH is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 437.00 in EHEALTH on August 24, 2024 and sell it today you would earn a total of 41.00 from holding EHEALTH or generate 9.38% 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. EHEALTH
Performance |
| Timeline |
| Apple Inc |
| EHEALTH |
Apple and EHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and EHEALTH
The main advantage of trading using opposite Apple and EHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, EHEALTH 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 EHEALTH will offset losses from the drop in EHEALTH's long position.| Apple vs. Mitsubishi Gas Chemical | Apple vs. GREENX METALS LTD | Apple vs. KENNAMETAL INC | Apple vs. Evolution 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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