Correlation Between Apple and Power Assets
Can any of the company-specific risk be diversified away by investing in both Apple and Power Assets 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 Power Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Power Assets Holdings, you can compare the effects of market volatilities on Apple and Power Assets 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 Power Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Power Assets.
Diversification Opportunities for Apple and Power Assets
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Apple and Power is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings 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 Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of Apple i.e., Apple and Power Assets go up and down completely randomly.
Pair Corralation between Apple and Power Assets
Given the investment horizon of 90 days Apple Inc is expected to under-perform the Power Assets. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 1.71 times less risky than Power Assets. The stock trades about -0.11 of its potential returns per unit of risk. The Power Assets Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 591.00 in Power Assets Holdings on January 25, 2024 and sell it today you would lose (11.00) from holding Power Assets Holdings or give up 1.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Power Assets Holdings
Performance |
| Timeline |
| Apple Inc |
| Power Assets Holdings |
Apple and Power Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Power Assets
The main advantage of trading using opposite Apple and Power Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Power Assets 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 Power Assets will offset losses from the drop in Power Assets' long position.The idea behind Apple Inc and Power Assets Holdings 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.| Power Assets vs. Kontrol Technologies Corp | Power Assets vs. 808 Renewable Energy | Power Assets vs. HUMANA INC | Power Assets vs. Aquagold International |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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