Correlation Between Apple and MBANK

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

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

Diversification Opportunities for Apple and MBANK

-0.64

Correlation Coefficient

Apple  MBANK

Excellent diversification

The 3 months correlation between Apple and MBANK is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and MBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBANK 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 MBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBANK has no effect on the direction of Apple i.e., Apple and MBANK go up and down completely randomly.

Pair Corralation between Apple and MBANK

Assuming the 90 days trading horizon Apple is expected to generate 1.23 times less return on investment than MBANK. But when comparing it to its historical volatility, Apple Inc is 1.97 times less risky than MBANK. It trades about 0.1 of its potential returns per unit of risk. MBANK is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,300  in MBANK on September 13, 2024 and sell it today you would earn a total of  6,220  from holding MBANK or generate 98.73% return on investment over 90 days.

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

Apple Inc  vs.  MBANK

Apple Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

MBANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MBANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Apple and MBANK

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

The idea behind Apple Inc and MBANK 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 Anywhere module to track or share privately all of your investments from the convenience of any device.