Correlation Between Apple and INDOSAT B

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

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

Diversification Opportunities for Apple and INDOSAT B

-0.32

Correlation Coefficient

Apple  INDOSAT B

Very good diversification

The 3 months correlation between Apple and INDOSAT is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and INDOSAT B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOSAT B 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 INDOSAT B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOSAT B has no effect on the direction of Apple i.e., Apple and INDOSAT B go up and down completely randomly.

Pair Corralation between Apple and INDOSAT B

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.39 times more return on investment than INDOSAT B. However, Apple Inc is 2.57 times less risky than INDOSAT B. It trades about 0.11 of its potential returns per unit of risk. INDOSAT B is currently generating about 0.04 per unit of risk. If you would invest  12,239  in Apple Inc on September 22, 2024 and sell it today you would earn a total of  12,111  from holding Apple Inc or generate 98.95% return on investment over 90 days.

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

Apple Inc  vs.  INDOSAT B

Apple Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

INDOSAT B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDOSAT B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Apple and INDOSAT B

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

The idea behind Apple Inc and INDOSAT B 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.