Correlation Between Apple and BKSY WT

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

Diversification Opportunities for Apple and BKSY WT

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Apple and BKSY is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and BKSY WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKSY WT 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 BKSY WT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKSY WT has no effect on the direction of Apple i.e., Apple and BKSY WT go up and down completely randomly.

Pair Corralation between Apple and BKSY WT

Given the investment horizon of 90 days Apple is expected to generate 13.08 times less return on investment than BKSY WT. But when comparing it to its historical volatility, Apple Inc is 12.72 times less risky than BKSY WT. It trades about 0.1 of its potential returns per unit of risk. BKSY WT is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6.00  in BKSY WT on September 3, 2024 and sell it today you would earn a total of  1.60  from holding BKSY WT or generate 26.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  BKSY WT

 Performance 
       Timeline  
Apple Inc 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 8 (%) 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.
BKSY WT 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in BKSY WT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, BKSY WT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Apple and BKSY WT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and BKSY WT

The main advantage of trading using opposite Apple and BKSY WT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, BKSY WT 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 BKSY WT will offset losses from the drop in BKSY WT's long position.
The idea behind Apple Inc and BKSY WT 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.
Check out your portfolio center.
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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