Correlation Between Apple and Event Hospitality

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

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

Diversification Opportunities for Apple and Event Hospitality

0.79

Correlation Coefficient

Apple  Event Hospitality

Poor diversification

The 3 months correlation between Apple and Event is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Event Hospitality and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Event Hospitality 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 Event Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Event Hospitality has no effect on the direction of Apple i.e., Apple and Event Hospitality go up and down completely randomly.

Pair Corralation between Apple and Event Hospitality

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.69 times more return on investment than Event Hospitality. However, Apple Inc is 1.44 times less risky than Event Hospitality. It trades about 0.24 of its potential returns per unit of risk. Event Hospitality and is currently generating about 0.06 per unit of risk. If you would invest  20,506  in Apple Inc on September 23, 2024 and sell it today you would earn a total of  3,824  from holding Apple Inc or generate 18.65% return on investment over 90 days.

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

Apple Inc  vs.  Event Hospitality and

Apple Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 19 (%) 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.

Event Hospitality

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Event Hospitality and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Event Hospitality is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apple and Event Hospitality

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

The idea behind Apple Inc and Event Hospitality and 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.