Correlation Between Apple and HEXAGON AB

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

By analyzing existing cross correlation between Apple Inc and HEXAGON AB ADR1, you can compare the effects of market volatilities on Apple and HEXAGON AB 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 HEXAGON AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and HEXAGON AB.

Diversification Opportunities for Apple and HEXAGON AB

-0.67

Correlation Coefficient

Apple  HEXAGON AB

Excellent diversification

The 3 months correlation between Apple and HEXAGON is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and HEXAGON AB ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXAGON AB ADR1 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 HEXAGON AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXAGON AB ADR1 has no effect on the direction of Apple i.e., Apple and HEXAGON AB go up and down completely randomly.

Pair Corralation between Apple and HEXAGON AB

Assuming the 90 days trading horizon Apple is expected to generate 147.74 times less return on investment than HEXAGON AB. But when comparing it to its historical volatility, Apple Inc is 1.71 times less risky than HEXAGON AB. It trades about 0.0 of its potential returns per unit of risk. HEXAGON AB ADR1 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  745.00  in HEXAGON AB ADR1 on January 28, 2024 and sell it today you would earn a total of  285.00  from holding HEXAGON AB ADR1 or generate 38.26% return on investment over 90 days.

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

Apple Inc  vs.  HEXAGON AB ADR1

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 latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

HEXAGON AB ADR1

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HEXAGON AB ADR1 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, HEXAGON AB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Apple and HEXAGON AB

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

The idea behind Apple Inc and HEXAGON AB ADR1 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.