Correlation Between Apple and Koss
Can any of the company-specific risk be diversified away by investing in both Apple and Koss 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 Koss into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Koss Corporation, you can compare the effects of market volatilities on Apple and Koss 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 Koss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Koss.
Diversification Opportunities for Apple and Koss
Very poor diversification
The 3 months correlation between Apple and Koss is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Koss Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koss 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 Koss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koss has no effect on the direction of Apple i.e., Apple and Koss go up and down completely randomly.
Pair Corralation between Apple and Koss
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Koss. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 1.07 times less risky than Koss. The stock trades about -0.19 of its potential returns per unit of risk. The Koss Corporation is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 248.00 in Koss Corporation on January 20, 2024 and sell it today you would lose (13.00) from holding Koss Corporation or give up 5.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Apple Inc vs. Koss Corp.
Performance |
| Timeline |
| Apple Inc |
| Koss |
Apple and Koss Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Koss
The main advantage of trading using opposite Apple and Koss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Koss 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 Koss will offset losses from the drop in Koss' long position.The idea behind Apple Inc and Koss Corporation 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.| Koss vs. LG Display Co | Koss vs. The Singing Machine | Koss vs. Wearable Devices | Koss vs. Zepp Health Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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