Correlation Between CHINA OIL and Apple
Can any of the company-specific risk be diversified away by investing in both CHINA OIL and Apple 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 CHINA OIL and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA OIL AND and Apple Inc, you can compare the effects of market volatilities on CHINA OIL and Apple 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 CHINA OIL with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA OIL and Apple.
Diversification Opportunities for CHINA OIL and Apple
Poor diversification
The 3 months correlation between CHINA and Apple is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CHINA OIL AND and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and CHINA OIL 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 CHINA OIL AND are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of CHINA OIL i.e., CHINA OIL and Apple go up and down completely randomly.
Pair Corralation between CHINA OIL and Apple
Assuming the 90 days trading horizon CHINA OIL is expected to generate 5.62 times less return on investment than Apple. But when comparing it to its historical volatility, CHINA OIL AND is 4.06 times less risky than Apple. It trades about 0.09 of its potential returns per unit of risk. Apple Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 17,986 in Apple Inc on September 3, 2024 and sell it today you would earn a total of 4,829 from holding Apple Inc or generate 26.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA OIL AND vs. Apple Inc
Performance |
| Timeline |
| CHINA OIL AND |
| Apple Inc |
CHINA OIL and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA OIL and Apple
The main advantage of trading using opposite CHINA OIL and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA OIL position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| CHINA OIL vs. INSURANCE AUST GRP | CHINA OIL vs. SCANSOURCE | CHINA OIL vs. Japan Post Insurance | CHINA OIL vs. QBE Insurance Group |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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