Correlation Between MULTI CHEM and Apple

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

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

Diversification Opportunities for MULTI CHEM and Apple

0.35

Correlation Coefficient

MULTI CHEM  Apple

Weak diversification

The 3 months correlation between MULTI and Apple is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding MULTI CHEM LTD and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and MULTI CHEM 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 MULTI CHEM 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 MULTI CHEM i.e., MULTI CHEM and Apple go up and down completely randomly.

Pair Corralation between MULTI CHEM and Apple

Assuming the 90 days trading horizon MULTI CHEM LTD is expected to under-perform the Apple. In addition to that, MULTI CHEM is 3.46 times more volatile than Apple Inc. It trades about -0.08 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.55 per unit of volatility. If you would invest  22,075  in Apple Inc on September 23, 2024 and sell it today you would earn a total of  2,145  from holding Apple Inc or generate 9.72% return on investment over 90 days.

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

MULTI CHEM LTD  vs.  Apple Inc

MULTI CHEM LTD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MULTI CHEM LTD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MULTI CHEM 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

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 fundamental indicators, Apple unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MULTI CHEM and Apple

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

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.