Correlation Between Apple and STOMO MITSUI

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

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

Diversification Opportunities for Apple and STOMO MITSUI

0.8

Correlation Coefficient

Apple  STOMO MITSUI

Very poor diversification

The 3 months correlation between Apple and STOMO is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and STOMO MITSUI FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STOMO MITSUI FINL 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 STOMO MITSUI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STOMO MITSUI FINL has no effect on the direction of Apple i.e., Apple and STOMO MITSUI go up and down completely randomly.

Pair Corralation between Apple and STOMO MITSUI

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.35 times more return on investment than STOMO MITSUI. However, Apple Inc is 2.89 times less risky than STOMO MITSUI. It trades about 0.62 of its potential returns per unit of risk. STOMO MITSUI FINL is currently generating about 0.05 per unit of risk. If you would invest  22,405  in Apple Inc on September 27, 2024 and sell it today you would earn a total of  1,980  from holding Apple Inc or generate 8.84% return on investment over 90 days.

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

Apple Inc  vs.  STOMO MITSUI FINL

Apple Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 20 (%) 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.

STOMO MITSUI FINL

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STOMO MITSUI FINL are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, STOMO MITSUI unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and STOMO MITSUI

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

The idea behind Apple Inc and STOMO MITSUI FINL 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.