Correlation Between Apple and 00108WAH3

Can any of the company-specific risk be diversified away by investing in both Apple and 00108WAH3 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 00108WAH3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and AEP TEX INC, you can compare the effects of market volatilities on Apple and 00108WAH3 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 00108WAH3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and 00108WAH3.

Diversification Opportunities for Apple and 00108WAH3

-0.54

Correlation Coefficient

Apple  00108WAH3

Excellent diversification

The 3 months correlation between Apple and 00108WAH3 is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and AEP TEX INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP TEX INC 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 00108WAH3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP TEX INC has no effect on the direction of Apple i.e., Apple and 00108WAH3 go up and down completely randomly.

Pair Corralation between Apple and 00108WAH3

Given the investment horizon of 90 days Apple Inc is expected to under-perform the 00108WAH3. In addition to that, Apple is 2.39 times more volatile than AEP TEX INC. It trades about -0.15 of its total potential returns per unit of risk. AEP TEX INC is currently generating about -0.12 per unit of volatility. If you would invest  9,643  in AEP TEX INC on December 24, 2024 and sell it today you would lose (449.00) from holding AEP TEX INC or give up 4.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.0%
Values	Daily Returns

Apple Inc  vs.  AEP TEX INC

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc 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 basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

AEP TEX INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days AEP TEX INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00108WAH3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Apple and 00108WAH3

The main advantage of trading using opposite Apple and 00108WAH3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, 00108WAH3 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 00108WAH3 will offset losses from the drop in 00108WAH3's long position.

The idea behind Apple Inc and AEP TEX INC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.