Correlation Between H2O Retailing and Apple

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Can any of the company-specific risk be diversified away by investing in both H2O Retailing 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 H2O Retailing and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and Apple Inc, you can compare the effects of market volatilities on H2O Retailing 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 H2O Retailing with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and Apple.

Diversification Opportunities for H2O Retailing and Apple

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between H2O and Apple is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and H2O Retailing 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 H2O Retailing 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 H2O Retailing i.e., H2O Retailing and Apple go up and down completely randomly.

Pair Corralation between H2O Retailing and Apple

Assuming the 90 days horizon H2O Retailing is expected to generate 1.32 times more return on investment than Apple. However, H2O Retailing is 1.32 times more volatile than Apple Inc. It trades about 0.08 of its potential returns per unit of risk. Apple Inc is currently generating about -0.52 per unit of risk. If you would invest  1,340  in H2O Retailing on October 23, 2024 and sell it today you would earn a total of  30.00  from holding H2O Retailing or generate 2.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy94.12%
ValuesDaily Returns

H2O Retailing  vs.  Apple Inc

 Performance 
       Timeline  
H2O Retailing 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in H2O Retailing are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, H2O Retailing may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Apple Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Insignificant
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Apple is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

H2O Retailing and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with H2O Retailing and Apple

The main advantage of trading using opposite H2O Retailing and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing 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.
The idea behind H2O Retailing and Apple Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Global Correlations module to find global opportunities by holding instruments from different markets.

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