Correlation Between Apple and GSW Immobilien

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

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

Diversification Opportunities for Apple and GSW Immobilien

0.24

Correlation Coefficient

Apple  GSW Immobilien

Modest diversification

The 3 months correlation between Apple and GSW is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and GSW Immobilien AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSW Immobilien AG 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 GSW Immobilien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSW Immobilien AG has no effect on the direction of Apple i.e., Apple and GSW Immobilien go up and down completely randomly.

Pair Corralation between Apple and GSW Immobilien

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the GSW Immobilien. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 5.89 times less risky than GSW Immobilien. The stock trades about 0.0 of its potential returns per unit of risk. The GSW Immobilien AG is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,200  in GSW Immobilien AG on October 26, 2024 and sell it today you would earn a total of  800.00  from holding GSW Immobilien AG or generate 11.11% return on investment over 90 days.

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

Apple Inc  vs.  GSW Immobilien AG

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 very healthy fundamental indicators, Apple is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

GSW Immobilien AG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GSW Immobilien AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental drivers, GSW Immobilien displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and GSW Immobilien

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

The idea behind Apple Inc and GSW Immobilien AG 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.