Correlation Between Apple and GUDANG GARAM

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

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

Diversification Opportunities for Apple and GUDANG GARAM

-0.58

Correlation Coefficient

Apple  GUDANG GARAM

Excellent diversification

The 3 months correlation between Apple and GUDANG is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and GUDANG GARAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUDANG GARAM 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 GUDANG GARAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUDANG GARAM has no effect on the direction of Apple i.e., Apple and GUDANG GARAM go up and down completely randomly.

Pair Corralation between Apple and GUDANG GARAM

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.93 times more return on investment than GUDANG GARAM. However, Apple Inc is 1.07 times less risky than GUDANG GARAM. It trades about 0.13 of its potential returns per unit of risk. GUDANG GARAM is currently generating about -0.21 per unit of risk. If you would invest  20,246  in Apple Inc on September 3, 2024 and sell it today you would earn a total of  2,189  from holding Apple Inc or generate 10.81% return on investment over 90 days.

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

Apple Inc  vs.  GUDANG GARAM

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. In spite of comparatively fragile fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GUDANG GARAM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GUDANG GARAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Apple and GUDANG GARAM

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

The idea behind Apple Inc and GUDANG GARAM 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.