Correlation Between Apple and NORDHEALTH

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

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

Diversification Opportunities for Apple and NORDHEALTH

0.09

Correlation Coefficient

Apple  NORDHEALTH

Significant diversification

The 3 months correlation between Apple and NORDHEALTH is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and NORDHEALTH AS NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORDHEALTH AS NK 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 NORDHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORDHEALTH AS NK has no effect on the direction of Apple i.e., Apple and NORDHEALTH go up and down completely randomly.

Pair Corralation between Apple and NORDHEALTH

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.32 times more return on investment than NORDHEALTH. However, Apple Inc is 3.17 times less risky than NORDHEALTH. It trades about 0.12 of its potential returns per unit of risk. NORDHEALTH AS NK is currently generating about 0.04 per unit of risk. If you would invest  17,712  in Apple Inc on August 30, 2024 and sell it today you would earn a total of  4,603  from holding Apple Inc or generate 25.99% return on investment over 90 days.

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

Apple Inc  vs.  NORDHEALTH AS NK

Apple Inc

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in December 2024.

NORDHEALTH AS NK

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NORDHEALTH AS NK are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, NORDHEALTH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and NORDHEALTH

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

The idea behind Apple Inc and NORDHEALTH AS NK 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.