Correlation Between Apple and SBI Holdings

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

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

Diversification Opportunities for Apple and SBI Holdings

0.59

Correlation Coefficient

Apple  SBI Holdings

Very weak diversification

The 3 months correlation between Apple and SBI is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SBI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Holdings 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 SBI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Holdings has no effect on the direction of Apple i.e., Apple and SBI Holdings go up and down completely randomly.

Pair Corralation between Apple and SBI Holdings

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.53 times more return on investment than SBI Holdings. However, Apple Inc is 1.9 times less risky than SBI Holdings. It trades about 0.06 of its potential returns per unit of risk. SBI Holdings is currently generating about -0.04 per unit of risk. If you would invest  23,345  in Apple Inc on October 10, 2024 and sell it today you would earn a total of  225.00  from holding Apple Inc or generate 0.96% return on investment over 90 days.

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

Apple Inc  vs.  SBI Holdings

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.

SBI Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SBI Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and SBI Holdings

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

The idea behind Apple Inc and SBI Holdings 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..