Correlation Between Apple and KINGBOARD CHEMICAL

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

By analyzing existing cross correlation between Apple Inc and KINGBOARD CHEMICAL, you can compare the effects of market volatilities on Apple and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and KINGBOARD CHEMICAL.

Diversification Opportunities for Apple and KINGBOARD CHEMICAL

0.93

Correlation Coefficient

Apple  KINGBOARD CHEMICAL

Almost no diversification

The 3 months correlation between Apple and KINGBOARD is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of Apple i.e., Apple and KINGBOARD CHEMICAL go up and down completely randomly.

Pair Corralation between Apple and KINGBOARD CHEMICAL

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.31 times more return on investment than KINGBOARD CHEMICAL. However, Apple Inc is 3.2 times less risky than KINGBOARD CHEMICAL. It trades about 0.34 of its potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about 0.09 per unit of risk. If you would invest  17,708  in Apple Inc on March 31, 2024 and sell it today you would earn a total of  2,232  from holding Apple Inc or generate 12.6% return on investment over 90 days.

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

Apple Inc  vs.  KINGBOARD CHEMICAL

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

KINGBOARD CHEMICAL

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KINGBOARD CHEMICAL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, KINGBOARD CHEMICAL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apple and KINGBOARD CHEMICAL

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

The idea behind Apple Inc and KINGBOARD CHEMICAL 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.