Correlation Between Apple and ECO ANIMAL

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

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

Diversification Opportunities for Apple and ECO ANIMAL

0.76

Correlation Coefficient

Apple  ECO ANIMAL

Poor diversification

The 3 months correlation between Apple and ECO is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and ECO ANIMAL HLTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECO ANIMAL HLTH 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 ECO ANIMAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECO ANIMAL HLTH has no effect on the direction of Apple i.e., Apple and ECO ANIMAL go up and down completely randomly.

Pair Corralation between Apple and ECO ANIMAL

Assuming the 90 days trading horizon Apple is expected to generate 11.88 times less return on investment than ECO ANIMAL. But when comparing it to its historical volatility, Apple Inc is 2.3 times less risky than ECO ANIMAL. It trades about 0.08 of its potential returns per unit of risk. ECO ANIMAL HLTH is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  95.00  in ECO ANIMAL HLTH on February 2, 2024 and sell it today you would earn a total of  30.00  from holding ECO ANIMAL HLTH or generate 31.58% return on investment over 90 days.

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

Apple Inc  vs.  ECO ANIMAL HLTH

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 basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ECO ANIMAL HLTH

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ECO ANIMAL HLTH are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ECO ANIMAL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Apple and ECO ANIMAL

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

The idea behind Apple Inc and ECO ANIMAL HLTH 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.