Correlation Between AP Mller and Apple

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Can any of the company-specific risk be diversified away by investing in both AP Mller 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 AP Mller and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Mller and Apple Inc, you can compare the effects of market volatilities on AP Mller 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 AP Mller with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Mller and Apple.

Diversification Opportunities for AP Mller and Apple

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between MAERSK-A and Apple is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and AP Mller 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 AP Mller 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 AP Mller i.e., AP Mller and Apple go up and down completely randomly.

Pair Corralation between AP Mller and Apple

Assuming the 90 days trading horizon AP Mller is expected to under-perform the Apple. In addition to that, AP Mller is 1.96 times more volatile than Apple Inc. It trades about -0.01 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.04 per unit of volatility. If you would invest  14,663  in Apple Inc on January 24, 2024 and sell it today you would earn a total of  2,027  from holding Apple Inc or generate 13.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy98.97%
ValuesDaily Returns

AP Mller   vs.  Apple Inc

 Performance 
       Timeline  
AP Mller 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AP Mller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Apple Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

AP Mller and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AP Mller and Apple

The main advantage of trading using opposite AP Mller and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Mller 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.
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The idea behind AP Mller 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.
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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