Correlation Between Apple and ABHY

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

Diversification Opportunities for Apple and ABHY

AppleABHYDiversified AwayAppleABHYDiversified Away100%
-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between Apple and ABHY is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ABHY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABHY 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 ABHY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABHY has no effect on the direction of Apple i.e., Apple and ABHY go up and down completely randomly.

Pair Corralation between Apple and ABHY

Given the investment horizon of 90 days Apple Inc is expected to generate 4.43 times more return on investment than ABHY. However, Apple is 4.43 times more volatile than ABHY. It trades about 0.15 of its potential returns per unit of risk. ABHY is currently generating about -0.08 per unit of risk. If you would invest  22,145  in Apple Inc on October 6, 2024 and sell it today you would earn a total of  2,191  from holding Apple Inc or generate 9.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  ABHY

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 051015
JavaScript chart by amCharts 3.21.15AAPL ABHY
       Timeline  
Apple Inc 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan220225230235240245250255260
ABHY 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ABHY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, ABHY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan18.91919.119.219.319.4

Apple and ABHY Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.37-2.53-1.68-0.830.00.891.792.683.58 123456
JavaScript chart by amCharts 3.21.15AAPL ABHY
       Returns  

Pair Trading with Apple and ABHY

The main advantage of trading using opposite Apple and ABHY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, ABHY 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 ABHY will offset losses from the drop in ABHY's long position.
The idea behind Apple Inc and ABHY 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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