Correlation Between Apple and OCBC
Can any of the company-specific risk be diversified away by investing in both Apple and OCBC 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 OCBC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and OCBC, you can compare the effects of market volatilities on Apple and OCBC 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 OCBC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and OCBC.
Diversification Opportunities for Apple and OCBC
Very poor diversification
The 3 months correlation between Apple and OCBC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and OCBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCBC 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 OCBC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCBC has no effect on the direction of Apple i.e., Apple and OCBC go up and down completely randomly.
Pair Corralation between Apple and OCBC
Assuming the 90 days trading horizon Apple is expected to generate 1.22 times less return on investment than OCBC. In addition to that, Apple is 1.24 times more volatile than OCBC. It trades about 0.07 of its total potential returns per unit of risk. OCBC is currently generating about 0.11 per unit of volatility. If you would invest 784.00 in OCBC on August 26, 2024 and sell it today you would earn a total of 284.00 from holding OCBC or generate 36.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. OCBC
Performance |
| Timeline |
| Apple Inc |
| OCBC |
Apple and OCBC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and OCBC
The main advantage of trading using opposite Apple and OCBC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, OCBC 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 OCBC will offset losses from the drop in OCBC's long position.| Apple vs. Platinum Investment Management | Apple vs. Corporate Travel Management | Apple vs. Air Lease | Apple vs. Chunghwa Telecom Co |
| OCBC vs. MTI WIRELESS EDGE | OCBC vs. Nishi Nippon Railroad Co | OCBC vs. Tower One Wireless | OCBC vs. Broadcom |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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