Correlation Between Apple and Exceed World

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

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

Diversification Opportunities for Apple and Exceed World

0.73

Correlation Coefficient

Apple  Exceed World

Poor diversification

The 3 months correlation between Apple and Exceed is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Exceed World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exceed World 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 Exceed World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exceed World has no effect on the direction of Apple i.e., Apple and Exceed World go up and down completely randomly.

Pair Corralation between Apple and Exceed World

Given the investment horizon of 90 days Apple is expected to generate 10.21 times less return on investment than Exceed World. But when comparing it to its historical volatility, Apple Inc is 17.14 times less risky than Exceed World. It trades about 0.19 of its potential returns per unit of risk. Exceed World is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Exceed World on September 14, 2024 and sell it today you would earn a total of  20.00  from holding Exceed World or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Apple Inc  vs.  Exceed World

Apple Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Apple disclosed solid returns over the last few months and may actually be approaching a breakup point.

Exceed World

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exceed World are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, Exceed World showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Exceed World

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

The idea behind Apple Inc and Exceed World 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.