Correlation Between KOBE STEEL and Apple

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

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

Diversification Opportunities for KOBE STEEL and Apple

-0.8

Correlation Coefficient

KOBE STEEL  Apple

Pay attention - limited upside

The 3 months correlation between KOBE and Apple is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding KOBE STEEL LTD and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and KOBE 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 KOBE STEEL LTD 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 KOBE STEEL i.e., KOBE STEEL and Apple go up and down completely randomly.

Pair Corralation between KOBE STEEL and Apple

Assuming the 90 days trading horizon KOBE STEEL LTD is expected to under-perform the Apple. In addition to that, KOBE STEEL is 1.11 times more volatile than Apple Inc. It trades about -0.02 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.01 per unit of volatility. If you would invest  21,269  in Apple Inc on October 24, 2024 and sell it today you would earn a total of  91.00  from holding Apple Inc or generate 0.43% return on investment over 90 days.

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

KOBE STEEL LTD  vs.  Apple Inc

KOBE STEEL LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KOBE STEEL LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, KOBE STEEL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Apple Inc

Risk-Adjusted Performance

0 of 100

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 comparatively stable fundamental indicators, Apple is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KOBE STEEL and Apple

The main advantage of trading using opposite KOBE STEEL and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KOBE 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 KOBE STEEL LTD 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.