Correlation Between Apple and Starguide

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

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

Diversification Opportunities for Apple and Starguide

-0.37

Correlation Coefficient

Apple  Starguide

Very good diversification

The 3 months correlation between Apple and Starguide is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Starguide Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starguide 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 Starguide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starguide Group has no effect on the direction of Apple i.e., Apple and Starguide go up and down completely randomly.

Pair Corralation between Apple and Starguide

Given the investment horizon of 90 days Apple is expected to generate 36.22 times less return on investment than Starguide. But when comparing it to its historical volatility, Apple Inc is 39.77 times less risky than Starguide. It trades about 0.1 of its potential returns per unit of risk. Starguide Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  400.00  in Starguide Group on October 9, 2024 and sell it today you would lose (399.36) from holding Starguide Group or give up 99.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.61%
Values	Daily Returns

Apple Inc  vs.  Starguide Group

Apple Inc

Risk-Adjusted Performance

8 of 100

OK

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 conflicting basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Starguide Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Starguide Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Starguide reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and Starguide

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

The idea behind Apple Inc and Starguide 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.