Correlation Between Apple and THORNEY TECHS

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

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

Diversification Opportunities for Apple and THORNEY TECHS

0.23

Correlation Coefficient

Apple  THORNEY TECHS

Modest diversification

The 3 months correlation between Apple and THORNEY is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and THORNEY TECHS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THORNEY TECHS LTD 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 THORNEY TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THORNEY TECHS LTD has no effect on the direction of Apple i.e., Apple and THORNEY TECHS go up and down completely randomly.

Pair Corralation between Apple and THORNEY TECHS

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.34 times more return on investment than THORNEY TECHS. However, Apple Inc is 2.94 times less risky than THORNEY TECHS. It trades about 0.22 of its potential returns per unit of risk. THORNEY TECHS LTD is currently generating about 0.0 per unit of risk. If you would invest  19,459  in Apple Inc on September 17, 2024 and sell it today you would earn a total of  4,156  from holding Apple Inc or generate 21.36% return on investment over 90 days.

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

Apple Inc  vs.  THORNEY TECHS LTD

Apple Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

THORNEY TECHS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Apple and THORNEY TECHS

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

The idea behind Apple Inc and THORNEY TECHS LTD 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.