Correlation Between Astar and Apple

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

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

Diversification Opportunities for Astar and Apple

-0.08

Correlation Coefficient

Astar  Apple

Good diversification

The 3 months correlation between Astar and Apple is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Astar 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 Astar are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Astar i.e., Astar and Apple go up and down completely randomly.

Pair Corralation between Astar and Apple

Assuming the 90 days trading horizon Astar is expected to under-perform the Apple. In addition to that, Astar is 5.19 times more volatile than Apple Inc. It trades about -0.18 of its total potential returns per unit of risk. Apple Inc is currently generating about -0.02 per unit of volatility. If you would invest  24,665  in Apple Inc on October 12, 2024 and sell it today you would lose (115.00) from holding Apple Inc or give up 0.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Astar  vs.  Apple Inc

Astar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Astar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Apple Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Astar and Apple

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

The idea behind Astar and Apple Inc 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.