Correlation Between Apple and FATFISH GROUP

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

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

Diversification Opportunities for Apple and FATFISH GROUP

0.71

Correlation Coefficient

Apple  FATFISH GROUP

Poor diversification

The 3 months correlation between Apple and FATFISH is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and FATFISH GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FATFISH GROUP LTD and Apple 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 Apple Inc are associated (or correlated) with FATFISH GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FATFISH GROUP LTD has no effect on the direction of Apple i.e., Apple and FATFISH GROUP go up and down completely randomly.

Pair Corralation between Apple and FATFISH GROUP

Assuming the 90 days trading horizon Apple is expected to generate 5.49 times less return on investment than FATFISH GROUP. But when comparing it to its historical volatility, Apple Inc is 8.53 times less risky than FATFISH GROUP. It trades about 0.08 of its potential returns per unit of risk. FATFISH GROUP LTD is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.80  in FATFISH GROUP LTD on September 4, 2024 and sell it today you would lose (0.25) from holding FATFISH GROUP LTD or give up 31.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Apple Inc  vs.  FATFISH GROUP LTD

Apple Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

FATFISH GROUP LTD

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FATFISH GROUP LTD are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FATFISH GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and FATFISH GROUP

The main advantage of trading using opposite Apple and FATFISH GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, FATFISH GROUP 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 FATFISH GROUP will offset losses from the drop in FATFISH GROUP's long position.

The idea behind Apple Inc and FATFISH GROUP LTD 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.