Correlation Between Apple and Agrometal SAI

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

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

Diversification Opportunities for Apple and Agrometal SAI

0.05

Correlation Coefficient

Apple  Agrometal SAI

Significant diversification

The 3 months correlation between Apple and Agrometal is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc DRC and Agrometal SAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agrometal SAI 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 DRC are associated (or correlated) with Agrometal SAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agrometal SAI has no effect on the direction of Apple i.e., Apple and Agrometal SAI go up and down completely randomly.

Pair Corralation between Apple and Agrometal SAI

Assuming the 90 days trading horizon Apple Inc DRC is expected to generate 0.6 times more return on investment than Agrometal SAI. However, Apple Inc DRC is 1.66 times less risky than Agrometal SAI. It trades about -0.03 of its potential returns per unit of risk. Agrometal SAI is currently generating about -0.11 per unit of risk. If you would invest  1,500,000  in Apple Inc DRC on December 30, 2024 and sell it today you would lose (75,000) from holding Apple Inc DRC or give up 5.0% of portfolio value over 90 days.

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

Apple Inc DRC  vs.  Agrometal SAI

Apple Inc DRC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc DRC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Apple is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Agrometal SAI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agrometal SAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Apple and Agrometal SAI

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

The idea behind Apple Inc DRC and Agrometal SAI 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.