Correlation Between Apple and YH Dimri
Can any of the company-specific risk be diversified away by investing in both Apple and YH Dimri 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 YH Dimri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and YH Dimri Construction, you can compare the effects of market volatilities on Apple and YH Dimri 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 YH Dimri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and YH Dimri.
Diversification Opportunities for Apple and YH Dimri
Pay attention - limited upside
The 3 months correlation between Apple and DIMRI is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and YH Dimri Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YH Dimri Construction 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 YH Dimri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YH Dimri Construction has no effect on the direction of Apple i.e., Apple and YH Dimri go up and down completely randomly.
Pair Corralation between Apple and YH Dimri
Given the investment horizon of 90 days Apple Inc is expected to under-perform the YH Dimri. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 2.05 times less risky than YH Dimri. The stock trades about -0.03 of its potential returns per unit of risk. The YH Dimri Construction is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,345,989 in YH Dimri Construction on January 24, 2024 and sell it today you would earn a total of 499,011 from holding YH Dimri Construction or generate 21.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 81.21% |
| Values | Daily Returns |
Apple Inc vs. YH Dimri Construction
Performance |
| Timeline |
| Apple Inc |
| YH Dimri Construction |
Apple and YH Dimri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and YH Dimri
The main advantage of trading using opposite Apple and YH Dimri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, YH Dimri 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 YH Dimri will offset losses from the drop in YH Dimri's long position.The idea behind Apple Inc and YH Dimri Construction 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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