Correlation Between Apple and Sharp Corp

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

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

Diversification Opportunities for Apple and Sharp Corp

0.12

Correlation Coefficient

Apple  Sharp Corp

Average diversification

The 3 months correlation between Apple and Sharp is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Sharp Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharp Corp ADR 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 Sharp Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharp Corp ADR has no effect on the direction of Apple i.e., Apple and Sharp Corp go up and down completely randomly.

Pair Corralation between Apple and Sharp Corp

Given the investment horizon of 90 days Apple Inc is expected to generate 0.23 times more return on investment than Sharp Corp. However, Apple Inc is 4.37 times less risky than Sharp Corp. It trades about 0.15 of its potential returns per unit of risk. Sharp Corp ADR is currently generating about 0.02 per unit of risk. If you would invest  22,253  in Apple Inc on September 12, 2024 and sell it today you would earn a total of  2,524  from holding Apple Inc or generate 11.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  Sharp Corp ADR

Apple Inc

Risk-Adjusted Performance

11 of 100

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 January 2025.

Sharp Corp ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sharp Corp ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Sharp Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Apple and Sharp Corp

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

The idea behind Apple Inc and Sharp Corp ADR 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.