Correlation Between CHINA CONBANK and Apple

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

By analyzing existing cross correlation between CHINA BANK ADR20 and Apple Inc, you can compare the effects of market volatilities on CHINA CONBANK 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 CONBANK with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA CONBANK and Apple.

Diversification Opportunities for CHINA CONBANK and Apple

-0.04

Correlation Coefficient

CHINA CONBANK  Apple

Good diversification

The 3 months correlation between CHINA and Apple is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CHINA BANK ADR20 and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and CHINA CONBANK 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 BANK ADR20 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 CONBANK i.e., CHINA CONBANK and Apple go up and down completely randomly.

Pair Corralation between CHINA CONBANK and Apple

Assuming the 90 days trading horizon CHINA BANK ADR20 is expected to generate 0.78 times more return on investment than Apple. However, CHINA BANK ADR20 is 1.28 times less risky than Apple. It trades about 0.21 of its potential returns per unit of risk. Apple Inc is currently generating about 0.03 per unit of risk. If you would invest  1,520  in CHINA BANK ADR20 on November 29, 2024 and sell it today you would earn a total of  70.00  from holding CHINA BANK ADR20 or generate 4.61% return on investment over 90 days.

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

CHINA BANK ADR20  vs.  Apple Inc

CHINA BANK ADR20

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA BANK ADR20 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CHINA CONBANK reported solid returns over the last few months and may actually be approaching a breakup point.

Apple Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Apple is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CHINA CONBANK and Apple

The main advantage of trading using opposite CHINA CONBANK and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA CONBANK 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 BANK ADR20 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.