Correlation Between KEISEI EL and Apple

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

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

Diversification Opportunities for KEISEI EL and Apple

0.25

Correlation Coefficient

KEISEI EL  Apple

Modest diversification

The 3 months correlation between KEISEI and Apple is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding KEISEI EL RAILWAY and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and KEISEI EL 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 KEISEI EL RAILWAY 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 KEISEI EL i.e., KEISEI EL and Apple go up and down completely randomly.

Pair Corralation between KEISEI EL and Apple

Assuming the 90 days trading horizon KEISEI EL RAILWAY is expected to under-perform the Apple. In addition to that, KEISEI EL is 3.87 times more volatile than Apple Inc. It trades about -0.16 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.8 per unit of volatility. If you would invest  22,315  in Apple Inc on September 29, 2024 and sell it today you would earn a total of  2,200  from holding Apple Inc or generate 9.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

KEISEI EL RAILWAY  vs.  Apple Inc

KEISEI EL RAILWAY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KEISEI EL RAILWAY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, KEISEI EL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Apple Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KEISEI EL and Apple

The main advantage of trading using opposite KEISEI EL and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KEISEI EL 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 KEISEI EL RAILWAY 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.