Correlation Between A1EN34 and Apple

Can any of the company-specific risk be diversified away by investing in both A1EN34 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 A1EN34 and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A1EN34 and Apple Inc, you can compare the effects of market volatilities on A1EN34 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 A1EN34 with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of A1EN34 and Apple.

Diversification Opportunities for A1EN34 and Apple

0.61

Correlation Coefficient

A1EN34  Apple

Poor diversification

The 3 months correlation between A1EN34 and Apple is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding A1EN34 and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and A1EN34 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 A1EN34 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 A1EN34 i.e., A1EN34 and Apple go up and down completely randomly.

Pair Corralation between A1EN34 and Apple

Assuming the 90 days trading horizon A1EN34 is expected to under-perform the Apple. But the stock apears to be less risky and, when comparing its historical volatility, A1EN34 is 1.98 times less risky than Apple. The stock trades about -0.02 of its potential returns per unit of risk. The Apple Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,379  in Apple Inc on September 30, 2024 and sell it today you would earn a total of  4,538  from holding Apple Inc or generate 134.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.0%
Values	Daily Returns

A1EN34  vs.  Apple Inc

A1EN34

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in A1EN34 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, A1EN34 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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. Despite somewhat uncertain basic indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with A1EN34 and Apple

The main advantage of trading using opposite A1EN34 and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A1EN34 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 A1EN34 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.