Long/Short: Apple/Google

ixus

Was just wondering how this strategy would work and threw it into yahoo.finance for a look. Interesting results for long Apple short Google.

Back to Google's IPO
Apple circa +900%
Google circa +300%
Total = +600%
http://finance.yahoo.com/echarts?s=AAPL#symbol=AAPL;range=5y;compare=GOOG


Last 2 years:
Apple +20%
Google -15%
Total = +35%
Interactive


1 year:
Apple - 32%
Google - 30%
Total = -2%
Interactive chart


6 months:
Apple + 45%
Google - 40%
Total = +5%
Interactive chart


3 Months:
Apple + 31%
Google + 14%
Total = + 17%
Interactive chart

woodseb

don't have an overiding opinion on either stock, but they are suited to a pair trade given they have v similiar betas. one thing to i would note though is that over the longer recent periods the difference in performance has been small, while only in the last 3 months AAPL has significantly outperformed GOOG so maybe the strategy might be short AAPL/long GOOG over the next while

suppose the key issues would be how strong AAPLs next product offerings will be and whether the premium products will maintain share in this economy

Idu

Interesting stuff but I would be wary of hedging two stocks without a clearer correlation. Both tech stocks but both make their money in totally different areas. Thats shown pretty clearly in the chart from when Google had it's IPO which would have been at a time where the I-Phone, I-Pod etc were really selling hard. Would have been a disaterous Long Google/Short Apple.

Did you have any reason for taking each one on a praticular side?

ixus

Literally only thought of it 5mins before posting. I had remembered thinking google was a short some 18months ago and wanted to see how it would have performed against another stock in the same area.

Agreed on their different revenue streams.

Just looking at those charts I think using the opposite hedge at any stage gives a lower probability of success. It would be better to wait for the two to converge again and employ that hedge. Would obviously depend on the fundamentals of product launches etc though and require a bit more indepth analysis.

Idu

Think it's a case of just picking a stock which turned out to be a great long to go with a short on Google. Whereas if you look at Google against Microsoft, Yahoo and the Nasdaq itself over the 18 month period you mentioned then google would be outperforming all of them by a minimum of 20%

Cant get the chart up for some reason

silverharp

I havnt come across being long/short 2 stocks in the same broad sector. Going back to your starting point you would still have to guess which company would outperform and now why should the trend persist


Just for fun , I'd be short apple and long the S&P now:D

daveirl

This post has been deleted.

ixus

AAPL +10%
GOOG +4%
Total +6%

The chart since I first posted this. Was just interested to see how it was doing.

Note: link will only bring you to 1 day. Put date pack to May 12th to get the results.