Correlation Between Apple and PROSTALUND

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

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

Diversification Opportunities for Apple and PROSTALUND

-0.37

Correlation Coefficient

Apple  PROSTALUND

Very good diversification

The 3 months correlation between Apple and PROSTALUND is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and PROSTALUND AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROSTALUND AB 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 PROSTALUND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROSTALUND AB has no effect on the direction of Apple i.e., Apple and PROSTALUND go up and down completely randomly.

Pair Corralation between Apple and PROSTALUND

Assuming the 90 days trading horizon Apple is expected to generate 582.09 times less return on investment than PROSTALUND. But when comparing it to its historical volatility, Apple Inc is 205.82 times less risky than PROSTALUND. It trades about 0.12 of its potential returns per unit of risk. PROSTALUND AB is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  96.00  in PROSTALUND AB on September 27, 2024 and sell it today you would lose (95.20) from holding PROSTALUND AB or give up 99.17% of portfolio value over 90 days.

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

Apple Inc  vs.  PROSTALUND AB

Apple Inc

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Apple displayed solid returns over the last few months and may actually be approaching a breakup point.

PROSTALUND AB

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in PROSTALUND AB are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PROSTALUND reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and PROSTALUND

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

The idea behind Apple Inc and PROSTALUND AB 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.