Correlation Between Sharp Corp and Apple

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Can any of the company-specific risk be diversified away by investing in both Sharp Corp and Apple 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 Sharp Corp and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sharp Corp ADR and Apple Inc, you can compare the effects of market volatilities on Sharp Corp and Apple 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 Sharp Corp with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sharp Corp and Apple.

Diversification Opportunities for Sharp Corp and Apple

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between Sharp and Apple is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sharp Corp ADR and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Sharp Corp 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 Sharp Corp ADR are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Sharp Corp i.e., Sharp Corp and Apple go up and down completely randomly.

Pair Corralation between Sharp Corp and Apple

Assuming the 90 days horizon Sharp Corp is expected to generate 1.83 times less return on investment than Apple. In addition to that, Sharp Corp is 4.89 times more volatile than Apple Inc. It trades about 0.02 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.16 per unit of volatility. If you would invest  22,862  in Apple Inc on September 19, 2024 and sell it today you would earn a total of  2,486  from holding Apple Inc or generate 10.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sharp Corp ADR  vs.  Apple Inc

 Performance 
       Timeline  
Sharp Corp ADR 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Sharp Corp ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Sharp Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Apple Inc 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sharp Corp and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sharp Corp and Apple

The main advantage of trading using opposite Sharp Corp and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sharp Corp position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.
The idea behind Sharp Corp ADR and Apple Inc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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