Correlation Between Sharp and Apple

Can any of the company-specific risk be diversified away by investing in both Sharp 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 Sharp and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sharp and Apple Inc, you can compare the effects of market volatilities on Sharp 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 Sharp with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sharp and Apple.

Diversification Opportunities for Sharp and Apple

0.71

Correlation Coefficient

Sharp  Apple

Poor diversification

The 3 months correlation between Sharp and Apple is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sharp and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Sharp 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 Sharp 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 Sharp i.e., Sharp and Apple go up and down completely randomly.

Pair Corralation between Sharp and Apple

If you would invest  18,249  in Apple Inc on March 9, 2024 and sell it today you would earn a total of  1,440  from holding Apple Inc or generate 7.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sharp  vs.  Apple Inc

Sharp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sharp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sharp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Apple Inc

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Apple disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sharp and Apple

The main advantage of trading using opposite Sharp and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sharp 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.

The idea behind Sharp 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.