Is Apple stock still a good investment at the current price level ?

It is a common Dream for all those people who are looking for a nice wealth, in a short time.

I can not count how many times I talked with friends Like Hadi about those who Buy Amazon Stock in 2002 at about $8. and just after 5 years, the stock reaches $80 which means 1000% now those people worth $3400 per shear. yes, that is true (three thousand four hundred) .. pick your calculator to see how much that rate is?.

This is the Fact, a good company and good project may worth like that. so the question is. who is the next?

which stock can I buy right now and worth me 1000% after 5 years? I have the conviction for this number.

I try to create a Financial analysis Model test this hypothesis for a particular stock price using python. this is a start-up of this project and my example here will be APPLE stock. 

So the question is (Is Apple stock still a good investment at the current price level?)

let see how was the price a 5 years ago and haw the risk was? and how much gain from 5 years till now. and what is the relation between the stock price and its Index (NASDAQ)? 

Then comparing the change in trend an the correlation between the stock and the index. according to the result, I will test the hypotheses of (can the stock price give at least the same profit in the next 5 years according to the percent of a price change?)

Step No. 1  "Preparing Data"

The data of Apple and Nasdaq downloaded from Investing.com as a CSV file, form January 02, 2015, until August 18, 2021, and uploaded to my google drive. all data frame was an Object and have a lot of symbols. so it takes some time to remove all symbols and convert all data to numeric so I can do the calculation. 

Please feel free to have a look at the codes and result from this link stock analysis module

Step No. 2  "Trend analysis"

As a Technical analysis, it is so easy to determine the major trend by visualizing your data.

Both APPLE and NASDAQ have an Uptrend.    

But Apple starts it's Up-trend late (2016-05-12) while NASDAQ start Its Up-Trend before that 3 Months (2016-02-11)

That shows how is NASDAQ is a Leading Indicators for Apple, Just if there are a high correlation and covariance between them.

because of that, it was so important to plotting both trends in one graph, because if  Nasdaq and Apple have a high correlation and covariance between them. so Nasdaq will act as a support and resistance line to Apple. 

From the graph above we can note that both Nasdaq and Apple stock have uptrend.

But Apple starts it's Up-trend late (2016-05-12) while NASDAQ start Its Up-Trend before that 3 Months (2016-02-11)

That shows how is NASDAQ is a Leading Indicators for Apple, Just if there is a big correlation and covariance between them.

Step No. 3  "Correlation and Covariance analysis"

the question here is how Apple and NASDAQ price is correlated together, and how much is that correlation?

The correlation test shows that for 1417 trading days, Apple and NASDAQ have a high positive correlation between its Closes, Highs, and Lows Prices.

 

I Measure The correlation for Highs, and Lows Prices also to be sure that this correlation is not an accident. and that what get, where the correlations of all are about 0.94.

 

Now we need to know how much is this positive correlation is, here is the position of Covariance, which show high values also. 

  

Relative strength analysis (RPS)

Most of the time Apple is Outperform NASDAQ, but the average Relative strength is about 1.43.

Also From the Graph we can note How much the Price Relative strength, is a good support to price rising, which means we Hold the asst till the price becomes lower than Price Relative strength, In such case, we recommend selling the asset.

But as a Note: Apple trend is sharper than its Index trend (NASDAQ)  and also the current Apple price is so far from its relative strength, that indicates Apple Trend becomes weak. 

Growth Analysis

Here we want to ask how much Apple price growth last tested period? and is the price will continue rising at the same rate? 

we assume that someone purchases in both assets at the open of  Jan 02, 2015, and he still holds the assets to Aug 18, 2020. we will ignore any dividend, just calculating the capital growth.

The total gain per one NASDAQ share is 6450.6 $ The total gain per one APPLE share is 350.86 $

The relative price for NASDAQ share is 2.3550997428701077 $ The relative price for APPLE share is 4.149833916868659 $

The gain % per one NASDAQ share is 135.50997428701078 % The gain % per one APPLE share is 314.98339168686596 %

so if we assume that the growth of price will be at the same rate, we just can calculate the continuously compounded return. 

We expect the continuously compounded returns for next 6 Years of NASDAQ 85.65830802318331 % We expect the continuously compounded returns for next 6 Years of APPLE 142.30683134101358 %

And then calculate the price will be after the same period of the tested period (the price at 2027)

We expect NASDAQ Price in 2027 will be 16736.314817343464 $ if we have the same Curcumistance of last 6 years We expect APPLE Price in 2027 will be 961.5477484430803 $ if we have the same Curcumistance of last 6 years

But we know that is such as expectation, we are not sure that the rate will be that value, everything is changeable.

So when test the Hypothesis that assume the price will continue with the same rate for the next 7 years till we reach the Price of $961.54 for apple according to the changing in the price for the last period. the probability was lower than 5% that that means I have less than 5 % as evidence. here we reject the null hypothesis.