Correlation Between Apple and Nabtesco Corp

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

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

Diversification Opportunities for Apple and Nabtesco Corp

0.78

Correlation Coefficient

Apple  Nabtesco Corp

Poor diversification

The 3 months correlation between Apple and Nabtesco is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Nabtesco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabtesco Corp 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 Nabtesco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabtesco Corp has no effect on the direction of Apple i.e., Apple and Nabtesco Corp go up and down completely randomly.

Pair Corralation between Apple and Nabtesco Corp

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.66 times more return on investment than Nabtesco Corp. However, Apple Inc is 1.51 times less risky than Nabtesco Corp. It trades about 0.1 of its potential returns per unit of risk. Nabtesco Corp is currently generating about -0.03 per unit of risk. If you would invest  12,381  in Apple Inc on October 10, 2024 and sell it today you would earn a total of  11,189  from holding Apple Inc or generate 90.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Apple Inc  vs.  Nabtesco Corp

Apple Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 13 (%) 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.

Nabtesco Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nabtesco Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nabtesco Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Apple and Nabtesco Corp

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

The idea behind Apple Inc and Nabtesco Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.