Correlation Between Armada Hflr and Apple

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

By analyzing existing cross correlation between Armada Hflr Pr and Apple Inc DRC, you can compare the effects of market volatilities on Armada Hflr and Apple 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 Armada Hflr with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Apple.

Diversification Opportunities for Armada Hflr and Apple

0.28

Correlation Coefficient

Armada Hflr  Apple

Modest diversification

The 3 months correlation between Armada and Apple is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Apple Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc DRC and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc DRC has no effect on the direction of Armada Hflr i.e., Armada Hflr and Apple go up and down completely randomly.

Pair Corralation between Armada Hflr and Apple

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Apple. In addition to that, Armada Hflr is 1.25 times more volatile than Apple Inc DRC. It trades about -0.08 of its total potential returns per unit of risk. Apple Inc DRC is currently generating about -0.01 per unit of volatility. If you would invest  1,347,500  in Apple Inc DRC on September 14, 2024 and sell it today you would lose (17,500) from holding Apple Inc DRC or give up 1.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Armada Hflr Pr  vs.  Apple Inc DRC

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Apple Inc DRC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Armada Hflr and Apple

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

The idea behind Armada Hflr Pr and Apple Inc DRC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.