Correlation Between Apple and Lumine

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

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

Diversification Opportunities for Apple and Lumine

0.51

Correlation Coefficient

Apple  Lumine

Very weak diversification

The 3 months correlation between Apple and Lumine is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Lumine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumine Group 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 Lumine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumine Group has no effect on the direction of Apple i.e., Apple and Lumine go up and down completely randomly.

Pair Corralation between Apple and Lumine

Given the investment horizon of 90 days Apple Inc is expected to generate 0.78 times more return on investment than Lumine. However, Apple Inc is 1.28 times less risky than Lumine. It trades about -0.07 of its potential returns per unit of risk. Lumine Group is currently generating about -0.35 per unit of risk. If you would invest  24,675  in Apple Inc on October 10, 2024 and sell it today you would lose (454.00) from holding Apple Inc or give up 1.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Apple Inc  vs.  Lumine Group

Apple Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Apple is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Lumine Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lumine Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, Lumine reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Lumine

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

The idea behind Apple Inc and Lumine Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.