Correlation Between Apple and KKR Co

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

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

Diversification Opportunities for Apple and KKR Co

0.61

Correlation Coefficient

Apple  KKR Co

Poor diversification

The 3 months correlation between Apple and KKR is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP 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 KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Apple i.e., Apple and KKR Co go up and down completely randomly.

Pair Corralation between Apple and KKR Co

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.79 times more return on investment than KKR Co. However, Apple Inc is 1.27 times less risky than KKR Co. It trades about -0.13 of its potential returns per unit of risk. KKR Co LP is currently generating about -0.14 per unit of risk. If you would invest  24,220  in Apple Inc on December 28, 2024 and sell it today you would lose (4,015) from holding Apple Inc or give up 16.58% of portfolio value over 90 days.

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

Apple Inc  vs.  KKR Co LP

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. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

KKR Co LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days KKR Co LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Apple and KKR Co

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

The idea behind Apple Inc and KKR Co LP 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..