Correlation Between Apple and Heidelberg Pharma

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

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

Diversification Opportunities for Apple and Heidelberg Pharma

-0.36

Correlation Coefficient

Apple  Heidelberg Pharma

Very good diversification

The 3 months correlation between Apple and Heidelberg is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Heidelberg Pharma AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heidelberg Pharma 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 Heidelberg Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heidelberg Pharma has no effect on the direction of Apple i.e., Apple and Heidelberg Pharma go up and down completely randomly.

Pair Corralation between Apple and Heidelberg Pharma

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.42 times more return on investment than Heidelberg Pharma. However, Apple Inc is 2.36 times less risky than Heidelberg Pharma. It trades about 0.18 of its potential returns per unit of risk. Heidelberg Pharma AG is currently generating about -0.02 per unit of risk. If you would invest  20,925  in Apple Inc on October 10, 2024 and sell it today you would earn a total of  2,645  from holding Apple Inc or generate 12.64% return on investment over 90 days.

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

Apple Inc  vs.  Heidelberg Pharma AG

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.

Heidelberg Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heidelberg Pharma AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Heidelberg Pharma is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apple and Heidelberg Pharma

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

The idea behind Apple Inc and Heidelberg Pharma 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.