Correlation Between Apple and NTG Clarity

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

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

Diversification Opportunities for Apple and NTG Clarity

0.82

Correlation Coefficient

Apple  NTG Clarity

Very poor diversification

The 3 months correlation between Apple and NTG is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and NTG Clarity Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Clarity Networks 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 CDR are associated (or correlated) with NTG Clarity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Clarity Networks has no effect on the direction of Apple i.e., Apple and NTG Clarity go up and down completely randomly.

Pair Corralation between Apple and NTG Clarity

Assuming the 90 days trading horizon Apple is expected to generate 5.95 times less return on investment than NTG Clarity. But when comparing it to its historical volatility, Apple Inc CDR is 6.92 times less risky than NTG Clarity. It trades about 0.11 of its potential returns per unit of risk. NTG Clarity Networks is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  15.00  in NTG Clarity Networks on September 26, 2024 and sell it today you would earn a total of  142.00  from holding NTG Clarity Networks or generate 946.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Apple Inc CDR  vs.  NTG Clarity Networks

Apple Inc CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

NTG Clarity Networks

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Clarity Networks are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NTG Clarity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and NTG Clarity

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

The idea behind Apple Inc CDR and NTG Clarity Networks 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.