Correlation Between Apple and INSURANCE AUST

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

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

Diversification Opportunities for Apple and INSURANCE AUST

0.49

Correlation Coefficient

Apple  INSURANCE AUST

Very weak diversification

The 3 months correlation between Apple and INSURANCE is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP 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 INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of Apple i.e., Apple and INSURANCE AUST go up and down completely randomly.

Pair Corralation between Apple and INSURANCE AUST

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the INSURANCE AUST. But the stock apears to be less risky and, when comparing its historical volatility, Apple Inc is 1.26 times less risky than INSURANCE AUST. The stock trades about -0.15 of its potential returns per unit of risk. The INSURANCE AUST GRP is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  492.00  in INSURANCE AUST GRP on December 28, 2024 and sell it today you would lose (54.00) from holding INSURANCE AUST GRP or give up 10.98% of portfolio value over 90 days.

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

Apple Inc  vs.  INSURANCE AUST GRP

Apple Inc

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

INSURANCE AUST GRP

Risk-Adjusted Performance

Very Weak

Over the last 90 days INSURANCE AUST GRP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary 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 INSURANCE AUST

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

The idea behind Apple Inc and INSURANCE AUST GRP 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.