Correlation Between Apple and OBIC CoLtd

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

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

Diversification Opportunities for Apple and OBIC CoLtd

-0.42

Correlation Coefficient

Apple  OBIC CoLtd

Very good diversification

The 3 months correlation between Apple and OBIC is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and OBIC CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OBIC CoLtd 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 OBIC CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OBIC CoLtd has no effect on the direction of Apple i.e., Apple and OBIC CoLtd go up and down completely randomly.

Pair Corralation between Apple and OBIC CoLtd

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.9 times more return on investment than OBIC CoLtd. However, Apple Inc is 1.11 times less risky than OBIC CoLtd. It trades about 0.08 of its potential returns per unit of risk. OBIC CoLtd is currently generating about 0.0 per unit of risk. If you would invest  17,765  in Apple Inc on October 5, 2024 and sell it today you would earn a total of  6,465  from holding Apple Inc or generate 36.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  OBIC CoLtd

Apple Inc

Risk-Adjusted Performance

0 of 100

Solid

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 uncertain fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

OBIC CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OBIC CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Apple and OBIC CoLtd

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

The idea behind Apple Inc and OBIC CoLtd 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.