Correlation Between TRADEGATE and Apple

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

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

Diversification Opportunities for TRADEGATE and Apple

0.13

Correlation Coefficient

TRADEGATE  Apple

Average diversification

The 3 months correlation between TRADEGATE and Apple is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and TRADEGATE 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 TRADEGATE 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 TRADEGATE i.e., TRADEGATE and Apple go up and down completely randomly.

Pair Corralation between TRADEGATE and Apple

Assuming the 90 days trading horizon TRADEGATE is expected to generate 365.33 times less return on investment than Apple. But when comparing it to its historical volatility, TRADEGATE is 3.85 times less risky than Apple. It trades about 0.0 of its potential returns per unit of risk. Apple Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  20,086  in Apple Inc on September 5, 2024 and sell it today you would earn a total of  2,944  from holding Apple Inc or generate 14.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

TRADEGATE  vs.  Apple Inc

TRADEGATE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRADEGATE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TRADEGATE is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Apple Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 13 (%) 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.

Pair Trading with TRADEGATE and Apple

The main advantage of trading using opposite TRADEGATE and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRADEGATE 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 TRADEGATE 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.