Correlation Between SOS and Apple

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

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

Diversification Opportunities for SOS and Apple

-0.46

Correlation Coefficient

SOS  Apple

Very good diversification

The 3 months correlation between SOS and Apple is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding SOS LTD A and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and SOS 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 SOS LTD A 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 SOS i.e., SOS and Apple go up and down completely randomly.

Pair Corralation between SOS and Apple

Assuming the 90 days horizon SOS LTD A is expected to generate 29.81 times more return on investment than Apple. However, SOS is 29.81 times more volatile than Apple Inc. It trades about 0.05 of its potential returns per unit of risk. Apple Inc is currently generating about 0.65 per unit of risk. If you would invest  710.00  in SOS LTD A on September 27, 2024 and sell it today you would lose (55.00) from holding SOS LTD A or give up 7.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SOS LTD A  vs.  Apple Inc

SOS LTD A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOS LTD A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SOS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Apple Inc

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Apple displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SOS and Apple

The main advantage of trading using opposite SOS and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOS 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 SOS LTD A 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..