Correlation Between Apple and America Great

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

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

Diversification Opportunities for Apple and America Great

-0.5

Correlation Coefficient

Apple  America Great

Very good diversification

The 3 months correlation between Apple and America is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and America Great Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on America Great Health 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 America Great. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of America Great Health has no effect on the direction of Apple i.e., Apple and America Great go up and down completely randomly.

Pair Corralation between Apple and America Great

Given the investment horizon of 90 days Apple is expected to generate 54.51 times less return on investment than America Great. But when comparing it to its historical volatility, Apple Inc is 57.32 times less risky than America Great. It trades about 0.09 of its potential returns per unit of risk. America Great Health is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.74  in America Great Health on September 5, 2024 and sell it today you would lose (0.71) from holding America Great Health or give up 95.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Apple Inc  vs.  America Great Health

Apple Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

America Great Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days America Great Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Apple and America Great

The main advantage of trading using opposite Apple and America Great positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, America Great 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 America Great will offset losses from the drop in America Great's long position.

The idea behind Apple Inc and America Great Health 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.