Correlation Between China Coal and Apple
Can any of the company-specific risk be diversified away by investing in both China Coal 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 Coal and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Coal Energy and Apple Inc, you can compare the effects of market volatilities on China Coal 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 Coal with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Coal and Apple.
Diversification Opportunities for China Coal and Apple
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Apple is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding China Coal Energy and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and China Coal 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 Coal Energy 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 Coal i.e., China Coal and Apple go up and down completely randomly.
Pair Corralation between China Coal and Apple
Assuming the 90 days horizon China Coal Energy is expected to generate 1.14 times more return on investment than Apple. However, China Coal is 1.14 times more volatile than Apple Inc. It trades about 0.42 of its potential returns per unit of risk. Apple Inc is currently generating about -0.06 per unit of risk. If you would invest 88.00 in China Coal Energy on January 24, 2024 and sell it today you would earn a total of 12.00 from holding China Coal Energy or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Coal Energy vs. Apple Inc
Performance |
| Timeline |
| China Coal Energy |
| Apple Inc |
China Coal and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Coal and Apple
The main advantage of trading using opposite China Coal and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Coal 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 Coal vs. SCIENCE IN SPORT | China Coal vs. Verizon Communications | China Coal vs. Chunghwa Telecom Co | China Coal vs. Sportsmans Warehouse Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
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