Correlation Between Apple and KEISEI EL

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

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

Diversification Opportunities for Apple and KEISEI EL

-0.41

Correlation Coefficient

Apple  KEISEI EL

Very good diversification

The 3 months correlation between Apple and KEISEI is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and KEISEI EL RAILWAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEISEI EL RAILWAY 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 KEISEI EL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEISEI EL RAILWAY has no effect on the direction of Apple i.e., Apple and KEISEI EL go up and down completely randomly.

Pair Corralation between Apple and KEISEI EL

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.13 times more return on investment than KEISEI EL. However, Apple Inc is 7.98 times less risky than KEISEI EL. It trades about 0.27 of its potential returns per unit of risk. KEISEI EL RAILWAY is currently generating about -0.12 per unit of risk. If you would invest  20,286  in Apple Inc on September 26, 2024 and sell it today you would earn a total of  4,099  from holding Apple Inc or generate 20.21% 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.  KEISEI EL RAILWAY

Apple Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

KEISEI EL RAILWAY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEISEI EL RAILWAY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Apple and KEISEI EL

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

The idea behind Apple Inc and KEISEI EL RAILWAY 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.