Correlation Between Apple and KOBE STEEL

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

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

Diversification Opportunities for Apple and KOBE STEEL

-0.4

Correlation Coefficient

Apple  KOBE STEEL

Very good diversification

The 3 months correlation between Apple and KOBE is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and KOBE STEEL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOBE STEEL LTD 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 KOBE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOBE STEEL LTD has no effect on the direction of Apple i.e., Apple and KOBE STEEL go up and down completely randomly.

Pair Corralation between Apple and KOBE STEEL

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.79 times more return on investment than KOBE STEEL. However, Apple Inc is 1.27 times less risky than KOBE STEEL. It trades about 0.13 of its potential returns per unit of risk. KOBE STEEL LTD is currently generating about -0.04 per unit of risk. If you would invest  17,238  in Apple Inc on October 9, 2024 and sell it today you would earn a total of  6,347  from holding Apple Inc or generate 36.82% 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.  KOBE STEEL LTD

Apple Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 14 (%) 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.

KOBE STEEL LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KOBE STEEL LTD 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Apple and KOBE STEEL

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

The idea behind Apple Inc and KOBE STEEL LTD 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.