Correlation Between Apple and LOral SA

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

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

Diversification Opportunities for Apple and LOral SA

-0.21

Correlation Coefficient

Apple  LOral SA

Very good diversification

The 3 months correlation between Apple and LOral is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and LOral SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOral SA 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 LOral SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOral SA has no effect on the direction of Apple i.e., Apple and LOral SA go up and down completely randomly.

Pair Corralation between Apple and LOral SA

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the LOral SA. In addition to that, Apple is 1.13 times more volatile than LOral SA. It trades about -0.46 of its total potential returns per unit of risk. LOral SA is currently generating about -0.06 per unit of volatility. If you would invest  34,585  in LOral SA on October 25, 2024 and sell it today you would lose (635.00) from holding LOral SA or give up 1.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Apple Inc  vs.  LOral SA

Apple Inc

Risk-Adjusted Performance

0 of 100

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 rather sound fundamental indicators, Apple is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

LOral SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOral SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, LOral SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apple and LOral SA

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

The idea behind Apple Inc and LOral SA 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.