Correlation Between Japan Steel and Apple

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

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

Diversification Opportunities for Japan Steel and Apple

0.05

Correlation Coefficient

Japan Steel  Apple

Significant diversification

The 3 months correlation between Japan and Apple is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Japan Steel and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Japan Steel 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 The Japan Steel 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 Japan Steel i.e., Japan Steel and Apple go up and down completely randomly.

Pair Corralation between Japan Steel and Apple

Assuming the 90 days horizon The Japan Steel is expected to generate 2.3 times more return on investment than Apple. However, Japan Steel is 2.3 times more volatile than Apple Inc. It trades about 0.01 of its potential returns per unit of risk. Apple Inc is currently generating about -0.19 per unit of risk. If you would invest  3,780  in The Japan Steel on December 21, 2024 and sell it today you would lose (100.00) from holding The Japan Steel or give up 2.65% of portfolio value over 90 days.

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

The Japan Steel  vs.  Apple Inc

Japan Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Japan Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Japan Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Japan Steel and Apple

The main advantage of trading using opposite Japan Steel and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Steel 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 The Japan Steel 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.