Correlation Between Apple and Aferian Plc

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

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

Diversification Opportunities for Apple and Aferian Plc

-0.48

Correlation Coefficient

Apple  Aferian Plc

Very good diversification

The 3 months correlation between Apple and Aferian is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Aferian Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aferian Plc 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 Aferian Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aferian Plc has no effect on the direction of Apple i.e., Apple and Aferian Plc go up and down completely randomly.

Pair Corralation between Apple and Aferian Plc

Given the investment horizon of 90 days Apple Inc is expected to generate 0.19 times more return on investment than Aferian Plc. However, Apple Inc is 5.19 times less risky than Aferian Plc. It trades about 0.12 of its potential returns per unit of risk. Aferian Plc is currently generating about -0.12 per unit of risk. If you would invest  22,214  in Apple Inc on September 5, 2024 and sell it today you would earn a total of  2,087  from holding Apple Inc or generate 9.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  Aferian Plc

Apple Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 9 (%) 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 January 2025.

Aferian Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aferian Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Apple and Aferian Plc

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

The idea behind Apple Inc and Aferian Plc 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.