Correlation Between Sto SE and Apple
Can any of the company-specific risk be diversified away by investing in both Sto SE 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 Sto SE and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sto SE Co and Apple Inc, you can compare the effects of market volatilities on Sto SE 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 Sto SE with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sto SE and Apple.
Diversification Opportunities for Sto SE and Apple
Very good diversification
The 3 months correlation between Sto and Apple is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sto SE Co and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Sto SE 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 Sto SE Co 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 Sto SE i.e., Sto SE and Apple go up and down completely randomly.
Pair Corralation between Sto SE and Apple
Assuming the 90 days trading horizon Sto SE Co is expected to under-perform the Apple. In addition to that, Sto SE is 1.34 times more volatile than Apple Inc. It trades about -0.02 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.09 per unit of volatility. If you would invest 12,684 in Apple Inc on September 5, 2024 and sell it today you would earn a total of 10,316 from holding Apple Inc or generate 81.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sto SE Co vs. Apple Inc
Performance |
| Timeline |
| Sto SE |
| Apple Inc |
Sto SE and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sto SE and Apple
The main advantage of trading using opposite Sto SE and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sto SE 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 Sto SE Co 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.| Apple vs. ACCSYS TECHPLC EO | Apple vs. AAC TECHNOLOGHLDGADR | Apple vs. GLG LIFE TECH | Apple vs. Jacquet Metal Service |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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