Correlation Between Apple and Ams AG

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

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

Diversification Opportunities for Apple and Ams AG

-0.42

Correlation Coefficient

Apple  Ams AG

Very good diversification

The 3 months correlation between Apple and Ams is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ams AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ams AG 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 Ams AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ams AG has no effect on the direction of Apple i.e., Apple and Ams AG go up and down completely randomly.

Pair Corralation between Apple and Ams AG

Given the investment horizon of 90 days Apple is expected to generate 504.26 times less return on investment than Ams AG. But when comparing it to its historical volatility, Apple Inc is 189.85 times less risky than Ams AG. It trades about 0.1 of its potential returns per unit of risk. ams AG is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  4,652  in ams AG on October 4, 2024 and sell it today you would lose (4,301) from holding ams AG or give up 92.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Apple Inc  vs.  ams AG

Apple Inc

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 8 (%) 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 February 2025.

ams AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Apple and Ams AG

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

The idea behind Apple Inc and ams AG 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.