Correlation Between CHINA STATE and Apple

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

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

Diversification Opportunities for CHINA STATE and Apple

-0.08

Correlation Coefficient

CHINA STATE  Apple

Good diversification

The 3 months correlation between CHINA and Apple is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding CHINA STATE STRU and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and CHINA STATE 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 CHINA STATE STRU 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 CHINA STATE i.e., CHINA STATE and Apple go up and down completely randomly.

Pair Corralation between CHINA STATE and Apple

Assuming the 90 days trading horizon CHINA STATE STRU is expected to generate 2.54 times more return on investment than Apple. However, CHINA STATE is 2.54 times more volatile than Apple Inc. It trades about 0.1 of its potential returns per unit of risk. Apple Inc is currently generating about 0.12 per unit of risk. If you would invest  92.00  in CHINA STATE STRU on September 23, 2024 and sell it today you would earn a total of  43.00  from holding CHINA STATE STRU or generate 46.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.23%
Values	Daily Returns

CHINA STATE STRU  vs.  Apple Inc

CHINA STATE STRU

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA STATE STRU are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CHINA STATE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Apple Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHINA STATE and Apple

The main advantage of trading using opposite CHINA STATE and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA STATE 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 CHINA STATE STRU 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.